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Eastman346

Should the bad banks been left to fail instead of being bailed-out?

Should we have let the bad banks fail instead of giving them a bail out?  

  1. 1. Should we have let the bad banks fail instead of giving them a bail out?



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Can we get a poll on "Should we have left the bad banks fail?". I would like to see what the people of this forums think. After reading some reports I'm thinking maybe the government should have let the bad banks fail. I read that the collapse of bad banks would have done more good than being bailed out.

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30 day poll added. Three [3] choice options included. Votes are public to cut down on potential clutter. :tup:

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I think the bigger question is could the U.S. withstand Americans losing thousands of jobs? Some here have said that the auto companies should've been bailed out and they were just as arrogant and reckless as the banks were although in a different way.

 

The banks were irresponsible on many levels and practiced predatory lending. They were arrogant because they didn't think that their actions would catch up to them. The car companies created garbage that Americans didn't want and remained arrogant because they thought that because they were American companies that Americans would continue to buy their products just because.

 

I think I have more of a problem with how the whole thing was handled. The banks are still not lending to folks who need it. The only folks that can get decent loans are folks like myself with credit score well in the 700s. The average American has a credit score below 700, so clearly one can see the problem. There shouldn't have been more requirements of the banks in order for them to get the bailout money that they received.

 

I personally would've bailed them out but with tighter regulations put in place. That has been to some degree, but it doesn't go far enough.

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I think the bigger question is could the U.S. withstand Americans losing thousands of jobs? Some here have said that the auto companies should've been bailed out and they were just as arrogant and reckless as the banks were although in a different way.

 

The banks were irresponsible on many levels and practiced predatory lending. They were arrogant because they didn't think that their actions would catch up to them. The car companies created garbage that Americans didn't want and remained arrogant because they thought that because they were American companies that Americans would continue to buy their products just because.

 

I think I have more of a problem with how the whole thing was handled. The banks are still not lending to folks who need it. The only folks that can get decent loans are folks like myself with credit score well in the 700s. The average American has a credit score below 700, so clearly one can see the problem. There shouldn't have been more requirements of the banks in order for them to get the bailout money that they received.

 

I personally would've bailed them out but with tighter regulations put in place. That has been to some degree, but it doesn't go far enough.

 

 

VG8 actually since the bailout post 2008, Ford and GM sales have jumped dramtically. Not to mention Ford's missize cars and minivan/crossovers in same period till now (2012 model year)have gotten rave reviews from car magazines/media and most important the public. So the bailout of GM Dodge/Chrsyler was a modest success. I know VG8 you not an Obama fan but this was one of his first acts as President and has seemed to work. Ford and Dodge/Chysler which made for years crappy mid size cars have gotten much better.

 

I agree 1000% VG8 concerning your takes on the feds bailing out the banks. Biggest mistake was fact the GW Bush team and those in Congress and the Banks that created this bailout, should been much strict with by the book repayment dates and no bonuses for the Bank CEO"s. In that scenrio it was damn if you do (bail out the banks) or damn if you don't(dont help them and create a possible global depression)choices so either way the American public was going to be screwed and lose billions either way.:P

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I think the argument out there is that by letting the bad banks fail that the good stronger banks would have stepped in and taken them over. That's what I'm unsure of. I don't even know if there are any good banks out there.

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I think the argument out there is that by letting the bad banks fail that the good stronger banks would have stepped in and taken them over. That's what I'm unsure of. I don't even know if there are any good banks out there.

 

Yeah, but the thing is that happened. Think about how many small banks folded and were taken over by bigger banks. Actually there aren't many small banks left and many have been taken over or merged.

 

List of bank mergers in the United States - Wikipedia, the free encyclopedia

 

I'm not even sure if the link covers all of them, but these are the main big ones. I think it was smart for the gov't to step in simply to allow folks more choices. I mean having 3 or 4 big banks is not exactly the most ideal situation either.

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Unlike the banks, the American car companies actually stepped up their game and now make vehicles that are competitive with foreign makes in quality, aesthetics, and power. It's sad that they go so complacent that they were making crap for years, but at least they finally woke up.

 

THe banks, on the other hand, have barely changed a thing since TARP. Some of them have actually been making money off of all the foreclosure sales they are doing in certain oparts of the country,

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Unlike the banks, the American car companies actually stepped up their game and now make vehicles that are competitive with foreign makes in quality, aesthetics, and power. It's sad that they go so complacent that they were making crap for years, but at least they finally woke up.

 

THe banks, on the other hand, have barely changed a thing since TARP. Some of them have actually been making money off of all the foreclosure sales they are doing in certain oparts of the country,

 

 

Well said my friend.:tup:

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YES! FDIC insures up to $100k, I think now its $250k, that would cover most Americans. People would have just went to the smaller banks and credit unions which offer much better features and less fees than the bigger banks. The bank bailout was a big waste of taxpayer money.

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Unlike the banks, the American car companies actually stepped up their game and now make vehicles that are competitive with foreign makes in quality, aesthetics, and power. It's sad that they go so complacent that they were making crap for years, but at least they finally woke up.

 

THe banks, on the other hand, have barely changed a thing since TARP. Some of them have actually been making money off of all the foreclosure sales they are doing in certain oparts of the country,

 

I wouldnt go that far as to say American car companies stepped up their game as a result of the bailouts and they shouldnt have needed a bailout to begin with. Why should they get it? The same goes for that solar power company that got half a billion for a bailout. Banks didnt deserve it either since they knew what they were doing when they were handing out loans, especially (no docs loans) to anyone who asked.

 

And Ford never accepted any bailout money from the government because they didnt need it. Thats what a good company they are. A few years before all of this happened they restructured their brand and made moves that would make them money off of their logos and brand so they would have money in the bank incase of an emergency. When that time came they held their own without their hat in their hand begging for a hand out. If Ford could do it why didnt Chevrolet , banks, or anyone else have the sense to?

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YES! FDIC insures up to $100k, I think now its $250k, that would cover most Americans. People would have just went to the smaller banks and credit unions which offer much better features and less fees than the bigger banks. The bank bailout was a big waste of taxpayer money.

 

How could they go to smaller banks, when many of the smaller banks have been eaten up by the bigger banks? :confused: As I said before, without the bailouts, I think you would have far fewer banks around, meaning less choice for us taxpayers and that certainly isn't a good thing. The bailout should've been done and done with much more requirements so that these banks were restructured better.

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Letting the bad banks fail would have done a number of IMMEDIATE things:

 

-In the short term it would have caused mass layoffs. Some of the largest names in banking would have gone under, or shrunken greatly in size.

-However, this would have also created a void in lending ability and a lull in activity. It would have reduced the availability of credit, pulling the reins back hard on much of the country's economic activity.

-It would have saved the government, and the taxpayers, quite a bit of money.

-It would have meant the end of a lifetime of patronage and luxury for those who profited at the largest banks up to the time of the crash.

-Where bankruptcies ensued, bankruptcy proceedings would have determined where the banks lost money, who was responsible, and if there was wrongdoing a legal channel would exist to claw back the earnings to return to those who were bilked out of their money.

 

After the initial shock, the following would have happened.

-Smaller banks, seeing an opportunity, would begin making the necessary investments to expand their services. Set on notice by the events leading up to the larger banks' failures, they would have done so CAUTIOUSLY and WISELY, creating a slow and steady rate of growth. These smaller banks would also provide jobs to desperate employees.

-Some of the laid off employees with other skills and some savings would have begun entrepreneurial efforts, which if successful would allow them to further cut into unemployment.

-Bankruptcy proceedings would MANDATE that the so called "above the fray" financial services firms that did the wheeling and dealing and made the most money did not get 100% of the value of the underlying securities held by the counterparty which went bankrupt. They would have been forced to eat some of the losses they passed onto others in the name of profit.

-Bankruptcy proceedings could also mandate refinancing of so called defaulted home equity loans, which would have allowed more people to remain in their homes instead of creating a mass of foreclosures and destroying entire cities and neighborhoods with a flood of vacancies and plummeting land values. (IE Goldman Sachs would not have gotten 100% of their AIG investments back! - thank you Tim Geithner and Hank Paulson you incompetent tools)

-The largest banks would have been smaller, and less influential - particularly on politics.

 

In the long run, not all that much would have been different. We'd still have high unemployment, no manufacturing base, a terrible health insurance system, toleration of illegal immigrants, overregulation of people's daily lives by a government too big in that area, undertaxation of the hyperwealthy by a Grover Norquist controlled government too small in that area, and an incompetent Congress with a president who won't bash heads to get things done that need to be done.

 

The government would have been a little bit less in debt (but still overwhelmingly so!) and a bunch of people who profitted off the crisis wouldn't have gotten as big a bonus. And the name on your ATM card might be different.

 

I say we should never have done the bailouts...but that alone will never explain the current state of affairs.

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I think the bigger question is could the U.S. withstand Americans losing thousands of jobs? Some here have said that the auto companies should've been bailed out and they were just as arrogant and reckless as the banks were although in a different way.

 

The banks were irresponsible on many levels and practiced predatory lending. They were arrogant because they didn't think that their actions would catch up to them. The car companies created garbage that Americans didn't want and remained arrogant because they thought that because they were American companies that Americans would continue to buy their products just because.

 

I think I have more of a problem with how the whole thing was handled. The banks are still not lending to folks who need it. The only folks that can get decent loans are folks like myself with credit score well in the 700s. The average American has a credit score below 700, so clearly one can see the problem. There shouldn't have been more requirements of the banks in order for them to get the bailout money that they received.

 

I personally would've bailed them out but with tighter regulations put in place. That has been to some degree, but it doesn't go far enough.

 

I actually agree with this post 100%:confused:

 

A lot of people don't realize that if the banks were not bailed out, most of us would not be able to afford anything at all. Interest rates on everything would have through the roof, taxes would have skyrocketed, and inflation would have drowned most of us.

 

The regulations should have been a little tighter, but at the end of the day Wall Street makes the world go round. So it is what it is. Therefore I vote No.

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I actually agree with this post 100%:confused:

 

A lot of people don't realize that if the banks were not bailed out, most of us would not be able to afford anything at all. Interest rates on everything would have through the roof, taxes would have skyrocketed, and inflation would have drowned most of us.

 

The regulations should have been a little tighter, but at the end of the day Wall Street makes the world go round. So it is what it is. Therefore I vote No.

 

Yep... It's a fact that many don't realize. Banks are the ones that give out loans for construction projects and many other things and without them many of us would've been effected negatively. The only problem now has been that they've been cutting back on giving out loans. However, I get pre-screened credit card offers like water to the point that I pick and chose what card I like and don't like and would qualify for a very low interest rate on a mortgage having been pre-screened for one at Chase just to see, so if your credit is good enough, banks will loan you money.

 

The problem is that with the recession folks still have a lot of credit card debt and you still have foreclosures going on too that will continue for at least a good little while longer, as some folks have tried to hold on.

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VG8 actually since the bailout post 2008, Ford and GM sales have jumped dramtically. Not to mention Ford's missize cars and minivan/crossovers in same period till now (2012 model year)have gotten rave reviews from car magazines/media and most important the public. So the bailout of GM Dodge/Chrsyler was a modest success. I know VG8 you not an Obama fan but this was one of his first acts as President and has seemed to work. Ford and Dodge/Chysler which made for years crappy mid size cars have gotten much better.

 

I agree 1000% VG8 concerning your takes on the feds bailing out the banks. Biggest mistake was fact the GW Bush team and those in Congress and the Banks that created this bailout, should been much strict with by the book repayment dates and no bonuses for the Bank CEO"s. In that scenrio it was damn if you do (bail out the banks) or damn if you don't(dont help them and create a possible global depression)choices so either way the American public was going to be screwed and lose billions either way.B)

 

Ford has been on a different path ever since Alan Mulally joined the team coming from Boeing. So there sucess story began in 2006. I knew they wouldn't need the bailout money. GM and Chrysler on the other hand were different stories. GM suffered quite a few build quality issues on many models from 1999-2007. There management team was all screwed up. They needed the money bad. Chrysler quality is still not what it should be, but they are much much better than they used to be.

 

I think the argument out there is that by letting the bad banks fail that the good stronger banks would have stepped in and taken them over. That's what I'm unsure of. I don't even know if there are any good banks out there.

 

That's pretty much what happened anyway. A banks number one objective is to turn a profit. There are a few good banks left out there.

 

YES! FDIC insures up to $100k, I think now its $250k, that would cover most Americans. People would have just went to the smaller banks and credit unions which offer much better features and less fees than the bigger banks. The bank bailout was a big waste of taxpayer money.

 

How was it a waste of taxpayer's money when the government earned interest off those loans?

 

I wouldnt go that far as to say American car companies stepped up their game as a result of the bailouts and they shouldnt have needed a bailout to begin with. Why should they get it? The same goes for that solar power company that got half a billion for a bailout. Banks didnt deserve it either since they knew what they were doing when they were handing out loans, especially (no docs loans) to anyone who asked.

 

And Ford never accepted any bailout money from the government because they didnt need it. Thats what a good company they are. A few years before all of this happened they restructured their brand and made moves that would make them money off of their logos and brand so they would have money in the bank incase of an emergency. When that time came they held their own without their hat in their hand begging for a hand out. If Ford could do it why didnt Chevrolet , banks, or anyone else have the sense to?

 

 

It's not free money. The loans cover the costs of the grants. Sometimes letting a company fail does 100 times more damage than just giving them a few dollars here and there. Not everyone is cut out to run a business, but just because one executive team fails doesn't mean you have to give up on the very backbone of the company. If GM and Chrysler went bankrupt, the price of ALL vehicles would have skyrocketed. This goes for trains and buses too.

 

They would have dragged more than 150 other companies down with them. Including Ford!

 

There are tons of vendors and supplier that provide products and services for multiple companies within an industry. Some of you aren't looking at the bigger picture.

 

When Nova stopped producing the RTS, Detroit Diesel Engines started to fade into the sunset. There was a lot more to it than just that, but the RTS product was known for having a DD. So was the Flxible. New Diesel hybrid platforms are pretty much Cummins exclusive. Has the RTS not ceased production, it is a very good possibility Detroit Diesel would still supply the transit market to this day.

 

So the point that should they have bailed anyone out is moot. Most of the taxpayer money has been paid back with interest. Sounds like a winner to me! As long as none of the companies revert back to the bad habits then it was a total success.

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It's not free money. The loans cover the costs of the grants. Sometimes letting a company fail does 100 times more damage than just giving them a few dollars here and there. Not everyone is cut out to run a business, but just because one executive team fails doesn't mean you have to give up on the very backbone of the company. If GM and Chrysler went bankrupt, the price of ALL vehicles would have skyrocketed. This goes for trains and buses too.

 

They would have dragged more than 150 other companies down with them. Including Ford!

 

There are tons of vendors and supplier that provide products and services for multiple companies within an industry. Some of you aren't looking at the bigger picture.

 

When Nova stopped producing the RTS, Detroit Diesel Engines started to fade into the sunset. There was a lot more to it than just that, but the RTS product was known for having a DD. So was the Flxible. New Diesel hybrid platforms are pretty much Cummins exclusive. Has the RTS not ceased production, it is a very good possibility Detroit Diesel would still supply the transit market to this day.

 

So the point that should they have bailed anyone out is moot. Most of the taxpayer money has been paid back with interest. Sounds like a winner to me! As long as none of the companies revert back to the bad habits then it was a total success.

 

 

Again that why i said earlier in the post this was not an easy 'slam decision' to make on the mega multi-billion dollars bailouts for the US-based automakers and the banks. It was as the immortal Bart Simpson would say 'damn if you do' and damn if you don't." In worst case scenrio, without bailing both of those industries out, we could have created a borderline 'economic depression' in 2008/2009.

 

Yes VG8 is correct that the feds should have made tougher agreements in the bank bailouts i.e no CEO bonuses, higher intrest on repaying the government the loans, etc. So in a sense, in a ugly decision making, at least for the automakers it was the right call. And on the banks, despite it's flaws it was IMO the best option in a bunch of crappy choices.:eek:

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Sounds like a winner to me! As long as none of the companies revert back to the bad habits then it was a total success.

 

Of all people I would not expect you to be that naive. The reason I'm against the bailouts is they rewarded bad behavior and more of the same is going on.

 

-It's still really easy to get credit, in general. (A friend of mine applied for a $50,000 construction loan, gave only his name and address, and no other information whatsoever, and was approved with no credit or background check. This friend is not in the construction industry, and I will name neither the bank nor the state this took place in, but it's not NY). I also routinely get offers for credit cards from other companies which greatly exceed the revolving line of credit I use now. I have good credit, but I shouldn't be receiving offers for the AMEX Black Card, for example. The availability of credit is evidenced by the still very high average credit card debt of Americans coupled with the fact that many Americans are paying off mortgages.

-Bank deposits made by savers are still subject to exorbitantly low interest rates, meaning savers are still being punished. The interest spread between payments on deposits and earnings from debt paid back with interest is pure profit for the banks.

-Banks are still investing heavily in the swings of an unpredictable stock market. As more baby boomers die off, retire, etc., those retirement savings come out of the market, no matter whether they were profitable or not, and drive prices down. Tie that to consumer deposits and now you'll have a lending shortage "problem" again.

-Joblessness festers, making it increasingly unlikely that more and more Americans will be able to meet their debt payments. Sure enough we are seeing foreclosures on the rise again in many states.

-Banks continue to compensate their executives, managers, and staff with large bonuses in spite of the handwriting on the wall.

-The bailouts allowed the banks to consolidate their grip on that sector of America's economy - they are now more "central" (I use that term derisively, sarcastically, and also somewhat regretably truthfully) than ever - which means that when the next collapse does come they'll be even bigger than "too big to fail" well what happens then? More subsidized losses at the feet of the taxpayers to cover privatized profits for the wealthy bank employees who continue to take home high pay?

 

America needs a trustbuster to come in and split them up, and ensure that lending and gambling in the stock market can never be done by the same legal entity (aka "bring back Glass-Steagal").

 

That might not be the case had the banks never been bailed out. The doomsday scenarios presented were a political scare tactic to push the bailout through quickly. But all that was accomplished was kicking the can down the road.

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