What are your thoughts on whether the US government should create a “bad bank” to buy up toxic assets from US financial institutions? What do you think are the short and long term consequences? Can you think of a better strategy to improve the US banks’ financial position in the short term to restore lending?
Tags: bad bank, bailout, US banks bailout, US financial institutions
The government coming up with the idea of creating a bad bank, or a government controlled bank to take care of this banking problem will probably make this economy worst off then it’s now because usually when the government takes control of something of this magnitude it doesn’t work as they thought. I don’t think we should create a so called bad bank to bail out the hurting financial institutions that are out there in America, but it’s kind of too late because if we don’t do something then we could be in more financial problems then we are now. The reason why I don’t think we should have the government owning the banks is then we’ll have the start of socialism, and socialism isn’t all that it’s cracked up to be. Some short and long term ramifications of the government owning banks and throwing a ton of money in to the economy are there is a risk that the inflation rate will sky rocket. This would make the economy worse than it is now. Another ramification is there is going to be a monster debt that everybody’s children, grandchildren, and great children will probably have to pay, for this financial problem. A way to improve the financial system, without having the government get involved to much is have the banks be more stringent on who can get loans in these tough financial times, I know this idea is a tough stance but if the banks did this from the beginning then we probably wouldn’t be in this mess that we are now. I’m not saying let no one be able to get a loan but have the banks before giving the loans out,look at the peoples financial history, and make sure they are able to pay it back in a reasonable time.
The government creating the “bad bank” to buy up the toxic assets from US financial institutions in my opinion is a bad idea. I do not think we should give any bailouts period. I think that it is a waste of the tax payers money and that whenever we give them the money they use it for what it i not suppose to be used for, I do not think we should give loans to those showing such poor judment. I think creating a bad bank it is just a disposal ground for bad loans and these loans will not get paid and we will be in more trouble, so therefor it is not a good idea. The government can’t fix this mess so I think it’s best for them to stay out of it, and with hard work and time we will rebuild our economy.
Government absolutely should not create a “bad bank.” Government running any business is counter-productive to our economy. Bigger government, bureaucracy, and the love of power are never good ingredients towards success. Once the government gets involve productivity slows to a crawl due to too many Chiefs and not enough Indians. The promotion of private industry, the true job creators, through tax cuts and incentives should be paramount in the solution to the financial crisis. With government solutions such as this it will be only a matter of time before everyone’s 401k’s and other retirement plans will be nationalized to fund this and other social programs.
I do not think that the government should create any bad banks to buy up all the toxic assets. I feel like the government will just create twice as much toxic assets and we could get into harder times. The short term consequences might seem to be better but as time goes on the long term consequences will get worse. I don’t know if there is any simple solution to restore lending. I think the best way to stop this from happening is to not give out so many loans to people that can’t or won’t pay them back. Banks should be more strict with giving them out.
No this is absolutly rediculous. The government should not buy up all the toxic assets nor should they make their own bank. Our government has a problem lately sticking their noses where it doesnt belong, they do not know how to run wall street or the car industry and they are definatly not bankers. All this would do is pro long the enivitable which is us (the taxpayers) paying for all of this anyways. Plus if the government had their own bank they would definatly take advantage of it in corrupt ways. When i read this artical i spit my coffee all over my computer and i wasnt even drinking any.
Although I do not agree with governmental bailouts as a principle, I think a drastic and (most importantly) marketable solution to the current situation is absolutely necessary and that this one fits the bill. Creating a “bad bank”, if properly executed, could restore consumer confidence while at the same time restarting the credit market. In the long run, bad-banking toxic assets would allow regulators the time to sift through the de-stressed financial institutions top-down while they work, allowing the market to stabilize in the short term, and there’s no more stable investment group than tax futures (children, grandchildren, etc) in a new administration.
I don’t know any better strategy to improve the financial position of American banks for the short term other than a social strategy of temporary nationalization, liquidation of assets, and bare bones restructuring (which, overall, is not an American methodology). If we consider nationalization a last resort, it would seem to be more logical to let the market heal over the long term while holding bad assets and releasing them strategically to improve returns, nationalizing the concrete assets to prop up quality of life for the generation which will take the brunt of our housing bubble burst.
I’m quite concerned about the bad bank idea. The administration is considering injecting money into financial firms while relieving them of their “toxic assets”. Now, clearly I borrowed that statement from the wall street journal. I am weary of that idea. The question I ask is: Aren’t we, the general public going to end up taking the hit, regardless of what the government decides to do?
In my opinion, the Bad Bank solution is simply a BAD idea. We have already witnessed the ineffectiveness of essentially rewarding those who obviously do not belong managing big business.
It’s quite simple really, much like behavior management concepts used for guiding the actions of small children, to extinguish an undesirable behavior one must suffer some sort of undesirable consequence; rewarding undesirable behavior ALWAYS results in a not only repetition of, but usually an increase in the unwanted behavior. Unfortunately the nature of most adults is not unlike that of children, therefore a system of consequences must be establish.
Resolution of the current lending issues must be founded on ACCOUNTABILITY. Lenders, “Bank Representatives /Salepeople”, as well as consumers must be held accountable for their actions.
I would much rather see the government use my hard earned money to conduct a thorough investigation (which would create jobs ;) into the lending histories of those involved. Those cases found to have OBVIOUS discrepencies in regard to financial histories and the ability to fulfill loans payment would be served penalties.
#1 Impose fines and penalties to irresponsible lenders and/or bank represenatives/salespeople, let those fines go to those in need of support with the stipulation they attend workshops on personal finance. Better yet seeing as these predatory lenders do not seem to be able to transfer the tangiblilty of $$ figures into the real world, sentence them to hours of community service in assisting with the Personal Finance education so desperately needed by todays population-myself included.
#2 Provide basic personal finance education to first time borrowers or better yet make Personal Finance 101 a requirement for all high school graduates.
Currently:
Some sort of a balance between aid and negative consequence must be struck for all parties involved to LEARN from this experience.
A bad bank is a terrible idea. The debt would still exist wouldn’t it, so won’t it need to be paid back?
I feel that government needs to back away from saving the economy and LET IT GO. We are only digging ourselves deeper into debt from other countries, and we should be trying to get back to being a self reliant country. We should be bringing jobs back here. If illegal immigration was put to a stop, imagine all the jobs that would be available to the citizens that deserve them!
If letting the economy collapse means another depression, than maybe we should just let it happen…we got through it before and became stronger because of it. Maybe it is the best answer to our problems. The easy way out never really gets you out anyway!
Since exactly what I was going to say has already been stated 8 or 9 times verbatim, I’m gona keep this short. Not only would the debt still exist, but we will only be digging ourselves deeper and deeper until it’s an endless abyss we can no longer just simply crawl out of. Although I believe it will eventually resolve itself on its own, I also firmly believe that we haven’t even seen the half of it yet. I predict it’s going to get exceedingly worse before it gets any better. So do I think the US should create a “bad bank”? NO. Course not. Just let it run its course
I really think this “Bad Bank” idea is not ok. I believe that the banks caused this on themselves and should take care of their problems. The government has no business in this bank industry. They want to help, that’s ok , we get it. However, the government has a billion other things to worry about. This Bad Bank idea should not be one. This is going to affect the tax payers in a critical way. It gets me MAD to know that the government is going to help out this corrupted mortgage loaners and business man. If you hear the news and see it on T.V, what did banks CEO’s and top personal of Citizens Bank do when the bad bank proposal was made. They decided to place an order for a $50 Million dollar private plane. Come on!!!. There’s a sign that is telling us that this idea is not going to work. After they took millions upon millions of dollars of bonuses and private planes, vacations ,upgrading their salary and who knows what else, do we really need to help this people?…. I think not, if they were so smart they should have know what was going to happen..
hmmm, honestly i admit that im not super educated when it comes to the whole economy thing…i know the jist of things. but right off the bat im thinking that if the goverment gets involved they’re going to get there money back some how and usually that means we take the hit. Plus im a firm believer in accepting responsibility.They did it to themselves.
The long term effects do not look too good for the government if they keep bailing out all companies in financial difficulty. On one hand short term will fix for now but it will just add to the building debt that we face. It is not the governments fault that these companies are struggling its their own fault. The should be forced to get out of their own troubles since they got themselves in them.
Instead of this “Bad Bank” idea, the government should really be regulating the current bank system. In fact, that’s what they should have been doing all along, because if they did then it’s possible that the subprime mortgage crisis could have been avoided all together. The government was so busy keeping an eye on big coorperations, after so many cases of investor fraud, that they did very little about banks that were lending large amounts of money to people who didn’t have the means to pay it back. I believe the “Bad Bank” is just another distraction from the real problem, and it’s also potentially harmful to the economy in the long-run.
Opinion, based on no research at all :
The economy is bad, banks are suffering, and as much as we don’t like banks at all, and would like to see them get out of business, throes are important financial institutes that society is relying on. People pay taxes and hoping for the best, Well, saving those banks are for the best now. Taking pressure from the banks will insure their proper operation, means they would focus once again on giving loans, dealing with investors, lowering the down payment on mortgages and help companies that creating jobs and wealth instead of focusing on their debts.
No I do not believe that the government should invest in a “bad bank,” to buy up toxic assets from the US financial institutions. The short term effect would be no more than a quick fix. The long term consequences would be a major burden on the tax payers that are picking up this deficit. This would only add to the growing budget short fall that will be a major burden on the next generation. (Example: what has happened to social security today.) The United States Senate and Congress chairman’s that are in charge of the banking and financial industry should set new guidelines for the operation of set institutions. These guidelines should be revisited at least once a year and set institutions would be open to these chairman for audits. Also, the high pay and bonuses given to the CEO’s should have a minimum. And at least have their financial portfolio published once a year for all interested.
well the bad bank taking up the bad assets would then take the all of these assets that are pretty much loan ranging, everyone else may be able to even out, then start making money again, but chances are this wont happen.
Although I’m somewhat unfamiliar with what is giong on in the government with all these problems involving money, assets and resources. The banks are already in trouble today for lending too much and one could only imagine that problems would only carry on if another bank was opened. This in my viewing is just another way of congress telling the middle class citizens that they have the power and authority to do what seems to be anything and whatever they want. This idea might have a good outcome at first but eventually down the road will probably end up leading to another depression for anyone it doesnt benefit.
I really do not have any other strategy, but In my understandings I think it is a bad idea for the government to create a Bad Bank due to the fact that people already are in debt and half of that population can not pay that debt on time.
I dont believe that the US government should create a “bad bank” to buy up toxic assets from US financial institutions. In doing so they are relying on the taxpayers to deal with the situation. What the government is doing is rewarding bad behavior. They are rewarding the banks by bailing them out and they are rewarding the people who took out the loans because there not losing anything, and there not being punished for taking out loans in which they couldnt afford.
I dont think the government should create a bad bank. I Feel that it will be a waste of time because the end result will be the people paying for it in the end. I think the government let these bankers and buyers suffer so that they do not make the same mistakes again because of corporate greed and maybe next time they will think before they buy and lend.
The idea of a “bad bank” to buy up all toxic assets from US Financial Institutions is unconstitutional. We all should have an equal opportunity in this country to SUCCEED!! or fail… and therefore, BAILOUTS ARE TYRRANY. Us taxpayers do not deserve any more debt. We are already sunject to pay back trillions of dollars as it is. And if we do bail these intitutions out, who is to say that they will allocate the funds appropriately? From experience, I have seen in the past that companies who are given bail out money do not always use the money for the correct reasons. I have always been a fan of laissez faire economics presented by Adam Smith in his “Wealth of NAtions.” The government should not interfere with the economy. It will be guided by “an invisible hand” and will function properly on its own. Before we create anymore debt, let’s just try to think about it for once!!
the government comign up with the idea to create a bad bank is stupid. where is all our money gonna go when the economy takes a turn for the worse? whats gonna happen if we all lost our jobs and we even lost the ability to go to college if we cant afford it? I do agree with Charles that the government shouldnt interfere with the economy. Things are better left untouched in the economy and let it run its course.
i don’t think a “bad bank” would be a good idea. Look wat happened when the government tried to help, they got screwed and their money was given out for raises. Are they serious? I don’t think the government should get involved at all. Let those banks suffer, they should have done a better job tracking where there money was headed. The government can’t afford to hand over money left and right for things that should have never gotten this bad in the first place.
I do not think that the US government creating a “bad bank” to buy up toxic assets from US financial institutions is a bad idea, but i dont think that it will work. The government is taking a huge risk by doing this but at the same time you cannot solve a financial crisis without the government assuming risk. One of the biggest difficulties in getting this bad bank program working was how to price the assests. If the government paid to little the banks would take a huge hit, but if the governemnt overpaid, then the taxpayers would take an even bigger hit. I think that if they let the banks hold on to these assests on their books then that would create an even bigger crisis. So, if the government bought all the bad assests, then taxpayers would take on all of the risk. By investing with private firms under the plan, the expectation is that taxpayers would share the risk along with any potential returns.
I really dont think creating “bad banks” will do anything to help our economy. It may help in short term because all of the toxic assets will be bought up but after sometime more banks will give out loans and create more toxic assets and the long term consequences will create a government bank that could be taking money instead of just buying up all toxic assets. this is not the way to help our economy because the more banks that are created the more loans and debt will stack up creating a worse situation than before.
Heres a quick response. Let all the banks and the homes burn. Dont sell out to foreign countries to fix our problems our we will be taken over. Oh wait, too late.
I don’t like the idea of the government creating “bad bank” to buy up toxic assets-it’s capitalist. If banks make a bad decision in loaning money to people who they wouldn’t normally loan to, there needs to be consequences for their behavior…what the banks did was unacceptable and there needs to be consequences.