We all heard the reasons for bailing out the too big to fail banks. They needed money to lend or nobody could get a loan, right? Without loans the money supply would contract and we would risk a depression. Then they got their money and still would not loan the money out.
How much have those banks increased their lending since then? Even now I have heard they are still not lending enough money. NPR is my source.
If we had let those banks fail and helped new banks take their place would it have been so different? Either way there would be little lending, right? The Federal Reserve System could have done quantitative easing to stabilize the money supply in the same way, only we would not be rewarding the banks that created the mess and we would have all new banks we could reward for helping get the economy back on track.
It seems to be more of a question of time to me. Does bailing out the too big to fail banks increase lending faster than all new banks? If so, how much faster?
we have to get rid of institutions like Moodys Who handed out AAA ratings on tranches of toxic credit default swaps on mortgages ,because their customers (the rules changed so transanctions were not judged on their merit , Moodys could charge the instititution gaining from the transaction) didn't care about the risk , it was a credit default swap there was no risk.
The too big to fail banks will not lend to small businesses.
http://www.american.com/archive/2012/may/why-arent-banks-lending-to-small-business-ask-bernanke
http://articles.businessinsider.com/2012-03-12/news/31146859_1_financial-crisis-banks-lending-money
http://www.npr.org/2012/05/25/153610068/in-tight-credit-market-a-tool-for-small-businesses
Geithner cannot be trusted!
http://dealbook.nytimes.com/2009/01/23/geithner-says-tarp-will-force-banks-to-lend-more/
Originally posted by KazetNagorraDoes it matter? Even if the result would be the same at least we would not be bailing out the banks the caused this mess.
What makes you think new/other banks would have lended (more) money to small businesses?
Rewarding failure. Is that the answer?
Some people claim we had no choice but to bail out the big banks that caused this mess. I say that is hogwash!
Originally posted by Metal BrainWhat if the result would have been worse?
Does it matter? Even if the result would be the same at least we would not be bailing out the banks the caused this mess.
Rewarding failure. Is that the answer?
Some people claim we had no choice but to bail out the big banks that caused this mess. I say that is hogwash!
Originally posted by Metal BrainHow long do you think a bank lasts if it always lends?
The big banks were not always lending.
Banks were overly optimistic before the 2008 crisis. Now they are overly pessimistic. That's just how people are. Things will go better after a while, people will get overoptimistic again, and then there will be a new crisis.
Originally posted by KazetNagorraThey stopped lending completely.
How long do you think a bank lasts if it always lends?
Banks were overly optimistic before the 2008 crisis. Now they are overly pessimistic. That's just how people are. Things will go better after a while, people will get overoptimistic again, and then there will be a new crisis.
http://247wallst.com/2008/09/17/the-next-wave-o/