Bailouts in 2008 with strings...

  • Thread starter Deleted member 1487
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Deleted member 1487

I've seen it suggested a few times that we shouldn't have offered the bail outs to Wallstreet in 2008, but what if Congress did what was in the best interest of the majority of Americans and attached strings to the bailouts? As I am not a finance or economics major I cannot suggest exactly what those strings would be, but lets assume they are a so-called 'dream package' that would return banking regulations to the pre-Reagan era and require lenders to start making loans again. Any other specifics would be welcomed from those more knowledgeable than I.

What effects would this have on the economic, consumer confidence, and the general public perception of Congress and events around the banking collapse?
 
I've seen it suggested a few times that we shouldn't have offered the bail outs to Wallstreet in 2008, but what if Congress did what was in the best interest of the majority of Americans and attached strings to the bailouts? As I am not a finance or economics major I cannot suggest exactly what those strings would be, but lets assume they are a so-called 'dream package' that would return banking regulations to the pre-Reagan era and require lenders to start making loans again. Any other specifics would be welcomed from those more knowledgeable than I.

What effects would this have on the economic, consumer confidence, and the general public perception of Congress and events around the banking collapse?

While this is theoretically a good idea, it is also probably too complex to be set up during the crises

You had the bank having wild shifts and runs on them, and the stock market swinging more than 10 percent in single days; the most important thing was to restore confidence... correcting regulations whilst important at that time would have been the equivilent of fixing a broken window in a house that was actively on fire

It had to be done quickly and the money needed to flow to the banks so investors would stop being so jittery; and the time lost crafting a series of caviats onto the money would have been terrifying; also tarp was passed with a coalition of bush and the congressional dems to restore confidence; there is no garuantee that alliance could hold if you make the bill too complicated
 
If that happened I think the US congress would become the toast of London, Hong Kong and Tokyo as bankers, traders and the like fled the country as fast as possible.

Going back to a forty year old regulation system (pre-Regan means late 1970s at best) is bad enough, but a law requiring banks to 'start lending' is going to be either ineffective or will end up with politically directed loans. Most likely case is that anything that can be moved will be moved. It's not going to see Wall Street close overnight, but a lot of bankers will either be looking for flights or a new job.

All in all probably not the best thing to do in the middle of a crisis.
 
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