US Bank Bailouts: Yay or Nay?

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It has been five years since the US government organized a bailout financial plan that had many loopholes. From the start, Americans viewed it negatively as they thought that it wouldn’t be a successful plan; that it was not a solution that aims to stop the financial crunch that the whole country was experiencing. The government still continued with it though, and gave funds to a number of banks.

The United States of America is not the only country that is experiencing financial crisis. Many countries in the world, especially European ones, have had hard times due to the world financial crisis that have been going on for at least five years. Bank bailouts have been seen as a solution to the crisis, but it seems like it produced more disadvantages than advantages.

One may wonder, how are bank bailouts a problem rather than a solution? For one, citizens think that banks would lend money once more, and they might depend on it rather than create a more plausible solution that would work best. The similar situation in other countries may provide fear for the financial institutions as they think of how the value of their assets may lower and cause for the cease in operations.

It can also not be denied that it would only generate fear that there is not enough money to be distributed to those who need it. Taxpayers may also be burdened by the loans borrowed by other loaners. To put it simply, bank bailouts are just a way to cover up the problem, and are not really solutions. The plan benefits businesses. However, it would only cause more trouble for the citizens as they have to pay taxes for the government to get back what they had let others to loan.

Just earlier this year, reports about how the US government released new bailout funds for banks were released. Quite expectedly, the citizens aren’t happy. Billions of dollars have been released for these banks, and these were all done without the citizens’ knowledge.

What’s good for one country may be bad for another, in terms of bank bailouts. If there’s something good coming out of the Cyprus bailout, it is that the US banks are benefiting from it. A good reason for it is that target depositors of future bailouts may want to move from European nations to that of the United States. It may be a slow process, but it’s happening; funds in European banks are slowly being transferred to US banks.

By how things are going, it seems like the 2008 bailout plan did not work as expected. There were positive things which happened, but it isn’t enough for the whole financial crisis in the United States to be solved. Although conditions are being improved in the country, there are still those who are yet to feel the efforts of solving the crisis that had been haunting them for more than five years.

Source by Janice B Alcantara

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