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The Big Bank Bailout Helped Who?

Updated on October 30, 2011
Not Foreclosed
Not Foreclosed | Source

The Bailout

This is just a lay mans view but then again isn’t that what most of us are or at least the poor amongst us?

The banks lend money to regular people to buy houses. They also lend money to the more wealthy so that they can supposedly invest correctly, to create wealth and jobs.

Now because the wealthy did not invest wisely, jobs and wealth declined. This meant that regular people found it hard to pay for their mortgages.

The banks complain, saying that without the mortgage money coming in they will have no money to lend to the investors to create jobs and wealth.

Believing this, the government lent the banks money. Never mind that the investors may continue to fail and what happened to the mortgage payer?

On top of still having to struggle with paying a mortgage they will also have to deal with paying the government their share of the bailout bill.

New Investment
New Investment | Source

Peoples Bailout

Surely it could have been better, that if the government was to pay a bailout, it should have been to the house buyers.

The government could have renegotiated mortgages, paying the banks their monthly rates and recouping from the buyers at a rate they could afford.

This then, would assure the banks received their dues and so could continue business as usual. It would also help the people buying houses, although they would still have to pay back over time.

It would not though help the banks with repayments of bad investments but aren’t these the same people that always tell us to borrow wisely, whilst dangling financial carrots in front of our eyes? The message should be to them to “lend wisely” and fire those that don’t instead of giving them large bonuses.

Bankers Parking Lot?
Bankers Parking Lot? | Source

Not Work

Obviously the second way would not work, why?

It wouldn’t work because it really had nothing to do with the house buyers.

It was only bad investors that created the problem and the way for them to get out is for the price of houses to drop. Those investors can then cheaply buy the foreclosed houses with bailout money. Then, when on paper, the economy improves; the investors can resell the houses at much higher rates, mortgages and give the economy, what looks like a kick start.

Then it will be back to the business of bad investments again, only their will be more people without houses but that’s ok because there will be plenty of houses available for mortgage and the banks will have plenty of bailout carrots to entice you.

Bad investments by the banks and the wealthy should be paid for by the banks and wealthy, leave the rest of us alone.

Don’t worry, if they can only buy a new car every two years instead of annually, at least the government, not having to pay a bailout, would have money available to help the subsequent unemployed auto makers find jobs.

We are told that big business can be big money but also big risks.

I am confused.

When these people supposedly take a big “risk” and it pays off, they get rich. If it does not, then the government bails them out. My confusion comes by not understanding their meaning of the word “risk”.

A risk would mean that the same people who stand to win also stand to gain.

In their instance, they stand to gain or the tax payer stands to lose, isn’t that exploitation?

So, does that mean that a government big bank bailout is in fact government sponsored exploitation?

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    • CASE1WORKER profile image

      CASE1WORKER 

      6 years ago from UNITED KINGDOM

      A lot of people are still smarting about the bank bail outs and the way that the bankers are still getting large salaries and bonuses

    • profile image

      diogenes 

      6 years ago

      We have just had another huge bailout here in Europe. Banks write their own checks today. They have their tentacles in hundreds of other businesses, from insurance to airlines, computers to heavy manufacturing. Any government defying the banks outright would loose the money they use to get reelected. This is why they continue to pay high bonuses and laugh in the face of regulation. Bob

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