Bank Bailouts Pros and Cons

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The bailout financial plan that was constituted by the US government in 2008 had more bank bailout cons than pros. From its onset, it received many negative views that predicted of its failure to work at easing the credit crunch that was fast plaguing the economy. However, the government still went ahead and gave out the funds to specific banks. Some of these bank bailout pros and cons are mentioned below.

One of the viable benefits of this financial plan was that it gave money to financial institutions, companies that dealt with cars and other businesses. These institutions were in great need of money so that they could be able to meet their fiscal obligations. Moreover, this plan was to help this financial problem from affecting every other sector of the economy.

There are several reasons that have been given since then on why the solution was not really a way out but just another problem. One reason was that no one believed that the help from the government would help to convince the citizens that banks would start to lend money again. Furthermore, with other similar situations from other nations, most banks feared that their assets could to an ultimate low that could see them go out of business.

It was also feared that there was no specific amount of money that could really help to ease the situation. In addition it was also feared that the bulk of paying these loans would still fall back on the taxpayer who was already in a financial crisis. It was also felt that the government by giving out bailout money to these banks was not dealing with the root cause of the problem, but just covering up.

The bailout plan had great benefits to the businesses that benefited from it. However, one of its main problems was the fact that the bulk of the payment cost was to be made by the taxpayers who were already in financial problems.



Source by Jon Safer

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