Congress rejects Bailout

Jeremy Lin

Banned
In September 2008 Congress approved a Bill to bail out the financial industry to the tune of $800 billion dollars in what was known as TARP. It faced rampant opposition from conservatives and Tea Party members who were ultimately strong-armed by President Bush and Treasury Sec Henry Paulson to approve it. Ultimately over 1.5 trillion dollars of tax payer money was spent on the bailout only for the American people to learn the financial industry was more profitable than at any point in history. So what would have happened if deficit hawks and fiscal conservatives had voted with their hearts and vetoed the bill a second time? Would the financial economy really have collapsed or was that just fear mongering by Wall Street?
 

Deleted member 1487

In September 2008 Congress approved a Bill to bail out the financial industry to the tune of $800 billion dollars in what was known as TARP. It faced rampant opposition from conservatives and Tea Party members who were ultimately strong-armed by President Bush and Treasury Sec Henry Paulson to approve it. Ultimately over 1.5 trillion dollars of tax payer money was spent on the bailout only for the American people to learn the financial industry was more profitable than at any point in history. So what would have happened if deficit hawks and fiscal conservatives had voted with their hearts and vetoed the bill a second time? Would the financial economy really have collapsed or was that just fear mongering by Wall Street?

There was no TEA party in 2008. It was just the Republican party that suddenly became conservative again.
Yes Wallstreet would have collapsed and dragged down all of the banking industries of the major nations invested in our banks. Bankruptcies would abound and it would be a financial year 0. There would have to be extraordinary measures to completely revamp the entire economy. It was basically less invasive for the government to bail out the banks than have to wipe the slate clean for everyone and start over.
 
In September 2008 Congress approved a Bill to bail out the financial industry to the tune of $800 billion dollars in what was known as TARP. It faced rampant opposition from conservatives and Tea Party members who were ultimately strong-armed by President Bush and Treasury Sec Henry Paulson to approve it. Ultimately over 1.5 trillion dollars of tax payer money was spent on the bailout only for the American people to learn the financial industry was more profitable than at any point in history. So what would have happened if deficit hawks and fiscal conservatives had voted with their hearts and vetoed the bill a second time? Would the financial economy really have collapsed or was that just fear mongering by Wall Street?

It was not, in any way, shape or form, 'fearmongering'. If the morons who had voted the bill down the first time had not learned their lesson from the 777-point collapse in the Dow the next day, then it would have been far, far worse if they'd voted it down for a second time.
The shockwaves were so bad that in the UK there was genuine fear that the cashpoints would stop working.
 
In September 2008 Congress approved a Bill to bail out the financial industry to the tune of $800 billion dollars in what was known as TARP. It faced rampant opposition from conservatives and Tea Party members who were ultimately strong-armed by President Bush and Treasury Sec Henry Paulson to approve it. Ultimately over 1.5 trillion dollars of tax payer money was spent on the bailout only for the American people to learn the financial industry was more profitable than at any point in history. So what would have happened if deficit hawks and fiscal conservatives had voted with their hearts and vetoed the bill a second time? Would the financial economy really have collapsed or was that just fear mongering by Wall Street?

Umm you do realize that the government actually turned a $200 billion dollar profit on TARP? And that if they hadn't don't it we would still be trying to dig out of the wreckage?

You know that little problem back in the 1930s? Called the Great Depression, it is very likely that this would have been worse - by like an order of magnitude. The current industrialized world has on the order of 5-7 days worth of food supplies in the pipeline and on the shelf, crash the banking system and no more food shipments get made. Because nobody is getting paid, nothing gets shipped. We have on the order of 3-5 days of fuel in the tanks and on the road, crash the banking system and that stops. Companies stop paying people, people stop spending the economy grinds to a halt. In the 1930s everyone had some cash - how much cash do you have in your house right now? Most people I know use credit and debit cards - even the people who are using mostly "cash" are using debit. Take out the banks and those cards stop working, EFT, stops working.

Things get ugly very fast. The folks that voted against TARP were really not thinking, the people that argue against it were really not thinking.

(This may be too soon for this to be history, since we are still having this argument in Political News).

Tom.
 

Jeremy Lin

Banned
Then why not nationalize the banks or at least break them up into financial, investment and banking sectors so this never happens again?
 
Then why not nationalize the banks or at least break them up into financial, investment and banking sectors so this never happens again?

Temporary nationalization, and breaking up the banks before putting them back on the market is what should have happened. But that would be "a socialist takeover of America by that marxist socialist Kenyan muslim President" so that wasn't going to happen.

Instead we had to treat them with kids gloves for fear they would fail. So as we get further away from September 2008 it will get easier to break up the banks and end "too big to fail" without causing major damage to the banking system. But at the same time, as we get further away from September 2008 it will get increasingly harder to get such a thing passed in Congress because of politics and lobbying.
 
Then why not nationalize the banks or at least break them up into financial, investment and banking sectors so this never happens again?

umm... tarp wasn't about covering the banks physical losses (except citi and aig); it was about restoring confidence ie the government saying, don't run on the banks we got this

there was nothing fundamentally wrong with the jpm's or wfc's of the world; they were just being destroyed in the general panic in the financial sector which the government stopped; and made almost all their money back on

tarp was a success in it's objective, restore confidence in the financial sector

it's non passage was pretty much asb; both dem and repub had their larger doners crawling up their ass to act
 
Well, there would be a lot fewer foreclosures, the banks wouldn't have to take a slap on the wrist for robosigning (since they'd go under), the Tea Party would be weaker, the stock market might be lower, and the system would either continue or shatter,- and the average person would still keep their physical possessions.

I think the financial system might have collapsed- but that's not the real economy.
 
Top