Watchdog: Bank Bailouts Created More Risk in System

FOXNews.com - Watchdog: Bank Bailouts Created More Risk in System
Quote:
The government's bailout of financial institutions deemed "too big to fail" has created a risk that the United States could face a worse fiscal meltdown in the future, an independent watchdog assigned to review the program told Congress on Sunday.

 

The bank bailouts were necessary but this forecast is definitely true. We have to restructure and regulate our banks properly or we could very well have a worse situation on our hands and it could be sooner rather than later. We're already at significant risk of another major situation towards the end of this year.

 

Necessary for what? Prop up bad business?

 

To stop the collapse of our financial system. Really with what you post and what I can discern from you, I'm surprised you were against the bank bailouts. You must not be in a business where you or your customers have to borrow money. We will make a profit on the TARP plan and while I agree, the banking model is broken, to not provide support for the banks would have been like cutting off our proverbial noses.

 

Liquidating the bad companies / debt would have hurt. But it would have been behind us by now. All we are doing is bailing out bad businesses with friends at the Fed and propping ourselves up for another bubble / crash.

 

I disagree that it would be behind us now. Those companies would be gone and there wouldn't be enough credit to go around. As it is, there is not enough credit to go around. Have you tried to get a business loan lately? It's damn near impossible with the structure and restrictions they have in place.

What we agree on is the fact that we are fumbling this thing now. We have to make these banks come into compliance with new regulations that will make it unnecessary to bail them out in the future. If we continue down this path, we are certain to have the same problem again. You are definitely right about that.

 

Credit was too easy to get for far too long which caused this crisis in the first place. Not to mention interest rates are extremely too low but I can't personally complain about that. BUT I know they have to go up at some point. Get ready.

And yes I have had no problem getting loans. Increased my business LOC, bought a home, etc. If you are not a risk then getting a loan is no problem.

 

That's not always true. I bet your LOC is highly collateralized. In a credit intensive business like real estate development, that's not as viable of an option. And I'm not talking about high risk development. I'm talking fully occupied buildings with credit tenants and buyers on the backside.

As far as interest rates, there's no question they are going up. They have to. The collapse of all of the country's major banks would not have brought us down to an adequate level of credit, it would have swung us too far. You think banks are nervous now, just imagine if the giants of industry had all fallen. You wouldn't be able to get so much as a car loan.

 

Nothing more than a personal guarantee.

 

That's about as high as it gets. :lol: