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Bailouts, why not take out the middleman?





ocalhoun
I was just thinking:

So, the feds 'loaned' money to the failing banks in order to 'get the banks lending again', which was hyped up as being critical to economic recovery.

But, since the banks are obviously not trustworthy for repayment of loans (if they were, they wouldn't fail in the first place).

Instead of loaning to the banks, who then, in turn, loan to individuals and businesses, why not loan money directly to individuals and businesses? They'd probably get much better chances of their money getting repaid in that case, and it would remove the inefficiency of failing banks from the process.

And, there is already a precedent to government-provided loans: FEMA loans. In fact, they might have even been able to use FEMA; just declare the economic slump as a disaster, and the low-interest loans would be disaster relief.
Ophois
I thought about this a while back.
Someone at work had pinned a piece of paper to the cork board in our little kitchen area at the station. On this paper, they had done some math, figuring out how much money was used to bail out these banks and such. Then they divided that money by the number of American citizens between the age of 18 and 50(I think that's what it was). The amount of money for each person was pretty big, and could have saved a lot of people from financial ruin. It was a pretty rough calculation, and by no means "dead on" accurate, but it did make me think about what you just posted here.

Why not send huge stimulus checks to local businesses, or qualifying individuals, as loans or grants or whatever, instead of just writing this enormous blank check to a group of corporations who have already proven to be failures, or outright corrupt?

It just makes me think that this Government is yet another incarnation of past administrations who have pandered to inept and criminal corporate enterprises, rather than cater to the needs of the people.
ocalhoun
Ophois wrote:

It just makes me think that this Government is yet another incarnation of past administrations who have pandered to inept and criminal corporate enterprises, rather than cater to the needs of the people.


That's because they're owned by those corporations.
Though I have no proof yet, I wouldn't be surprised at all to find connections between Obama and the banking and auto industries.
I do have proof of Bush's connections with the pharmaceutical industry, and his corrupt action that was based on that, as well as sharing the liberals' suspicion of his ties with the oil industry.

Ophois wrote:

Someone at work had pinned a piece of paper to the cork board in our little kitchen area at the station. On this paper, they had done some math, figuring out how much money was used to bail out these banks and such. Then they divided that money by the number of American citizens between the age of 18 and 50(I think that's what it was). The amount of money for each person was pretty big, and could have saved a lot of people from financial ruin. It was a pretty rough calculation, and by no means "dead on" accurate, but it did make me think about what you just posted here.

I just looked up the figures and did the math.
My estimate is that every person in the USA over the age of 18 could have been given $3,500.
Of course, that sum could be made much larger by only giving it to people who needed it.
Ophois
ocalhoun wrote:
That's because they're owned by those corporations.
Though I have no proof yet, I wouldn't be surprised at all to find connections between Obama and the banking and auto industries.
Yeah, I don't know what to make of this particular bailout unless those ties existed. Unless we write it off as a naive move by a rookie politician.
Quote:
I do have proof of Bush's connections with the pharmaceutical industry, and his corrupt action that was based on that, as well as sharing the liberals' suspicion of his ties with the oil industry.
Well the oil industry ties are pretty easy to see, but the pharmaceutical ties are heinous. That is, to me, the most corrupt, depraved corporate arm in the entire world.
Quote:
I just looked up the figures and did the math.
My estimate is that every person in the USA over the age of 18 could have been given $3,500.
Of course, that sum could be made much larger by only giving it to people who needed it.
Right, I don't remember the exact way it was written up when I saw it. There were conditions that limited it to not being every single American over 18, I'm pretty sure, because the amount of money was a good deal bigger. He might also have added in some later bailout money or something, I don't remember, I only looked at it briefly.

The point is, that every voting age person could have had $3,500. And as you said, if we put terms on it, such as small business loans, college loans, and even loans for smaller community banks, etc., I think it would have kick started our economy like a shot of lightning. And the inept/corrupt corporate giants would have fallen, with the money in the hands of the little guy.
I might just do the math myself, and write up a rough proposal of how that money could have been doled out in a far more useful fashion, and send it to my Congressman. Maybe get a ton of signatures on it first, who knows?
deanhills
ocalhoun wrote:
I was just thinking:

So, the feds 'loaned' money to the failing banks in order to 'get the banks lending again', which was hyped up as being critical to economic recovery.

But, since the banks are obviously not trustworthy for repayment of loans (if they were, they wouldn't fail in the first place).

Instead of loaning to the banks, who then, in turn, loan to individuals and businesses, why not loan money directly to individuals and businesses? They'd probably get much better chances of their money getting repaid in that case, and it would remove the inefficiency of failing banks from the process.

And, there is already a precedent to government-provided loans: FEMA loans. In fact, they might have even been able to use FEMA; just declare the economic slump as a disaster, and the low-interest loans would be disaster relief.
Ahhhh Ocalhoun, that is what I have been debating about right in the beginning. Remember the old local corporations - Building Societies, the little banks that are situated directly in the community? If there is anything that should have changed, when the writing was on the wall, was not to bail out BIG banks, but to force them to branch off and get back to the size they are supposed to be and to channel the "bail out" funds to the local communities. The problems we are having have a lot to do with the eighties gobbling up of the smaller banks and the fat cats getting fatter by merging investment banking with normal banking. We need to get back to our local banking system. And I agree wholeheartedly, if the bailout money could have rather been channelled directly to newly created small banks directly in the communities for the purposes of getting those communities restarted, it would have had much healthier consequences for the economy as a whole. Instead, the bubble has been refuelled and the FAT cats are partying again over the dead bodies of the small guys, only giving loans to FAT cats.
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