Was it necessary to bailout the banks?

Was it necessary for the federal government to bailout the banks or was it unmoral in a society where free markets and fewer regulations allow these banks to thrive each year? The issue of the government using citizens tax dollars to bailout private companies sparked a huge debate. In a free market economy and capitalist society banks in the United States are able to gain huge profits to increase revenue every year. When the banking crisis occurred, the United States domestic markets and the global market was facing huge burdens and looked to the government for aid to save millions of lives and dollars.

I think the federal government bailing out the banks was a necessary move, but it wasn’t the right thing to do. In a free market economy, less government intervention is always pushed and advocated for by business leaders. With less government regulations, big business and large corporations have the opportunity to exploits markets to seek huge revenue. With the global and domestic market of the United States facing the threat of bankrupt in 2008, the federal government intervened and bailed out the national banks. Many politicians and economist had opposing views on this matter. Some argued for the need of the government to bailout the banks to avoid a global depression. Others argued against because in a free market companies have to face the consequences of irresponsible behaviors.

The first section of my paper will give insight on the causes and effect of the banking crises. The second section of my paper will elaborate on the intervention of government into the market. In the third section of my paper I will review existing views and give light to my thoughts on whether the federal government should have bailed out the banks in a free market economy. Lastly I will conclude with the policies adopted by the federal government and the implications moving forward the restore the economic conditions.

1 thought on “Was it necessary to bailout the banks?

  1. OK. How about changing your main research question in a slightly different way? For instance, why didn’t the U.S. government attach more strict rules in bailing out banks? The U.S. government, in fact, did not intervene in bank management directly even after the bailout. For instance, U.S. banks still provided huge amount of bonuses to employees and no substantial salary cuts for CEOs. Why not?

    To prove your original question: “Was it necessary for the federal government to bailout the banks or was it unmoral in a society where free markets and fewer regulations allow these banks to thrive each year?”, you need to consider the counterfactual situation (in other words, no bailing out situation). But, the U.S. government has already used fiscal money for bank bailouts. So, it may be very difficult to convince your argument based on a counterfactual situation.

    For a more conniving argument, you’d better raise a bailout-related question from a different angle.

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