The American people are 90 to 1 against the bailout (surprise?) on general terms
I'm not sure what that's supposed to mean but, a near unanimous opinion within the general public, not likely. For example, the failure of WaMu bank which began in its sub-prime lending area and accelerated into it's ARM mortgage area shows, at first glance it could appear, had largely to do with its own banking practices.
While there should be no sympathy for any company that destroys itself through its own stupid choices, at least not as far as a government bailout, such failures are rapidly becoming widespread and economic strain can fairly quickly spread through a large swath of the banking sector and from there everywhere else.
How many more times can the private banking sector and the FDIC for that matter absorb these hits. Especially, 300B+ size hits. Have people conveniently left out of the debate the much larger problem of bank runs and financial panic?
How many of you who post here will be singing the same tune when long term chronic unemployment and under employment are in your homes, cities and states? What will happen to you when you look in the offices and businesses you work in and large numbers of people are no longer at work or the entire operation is scuttled? Do you even realize that farmers this past spring were struggling to find financing for the spring planting? What will happen next spring? Who will be financially sound enough to lend to the farmers?
The real problem with the bailout is its hastiness, its size and the manner in which it was presented namely act now within this one week or else.
The government doesn't have the option to do nothing. True, lawmakers can bicker and complain about socialized capitalism and other such meaningless nonsense if that's what they want to do, but will they still be in office if the FDIC fails? What would happen if 10% or more of banks began to fail? What will you do if your plastic doesn't work anymore and whatever you thought was in the bank can't be accessed, its frozen, because there's no longer an FDIC to step in and your bank has failed.
How bad and widespread is this problem? That question needs to be assessed by lawmakers and a plan of action adopted to address the problem. I think the failure of WaMu is a good indication this problem is today too big for inaction, it is widespread and, its still growing.
Furthermore, given how widespread this problem appears to be, it cannot be from anything other than a lack of regulation and enforcement. A mortgage just isn't a safe loan for a bank when there is less than 10 - 20% equity that the buyer has to have in addition to paying all buyer fees. Instead mortgages began being sold to the public like credit cards were.
Fees were being lumped into the mortgage, leveraged fees, leveraged stock purchases in the 1920's. Leveraged mortgage interest during the first few years of the home loan. Teaser interest rates. You name it the banks and their executives who approved this garbage were considering only the immediate appearance that "profats" were being produced therefore their "profat" bonuses and salaries would need to be increased again. The only thing that mattered to them is the loan didn't go bad during the first couple of years.
So yes, why bail them out of their own mess? Because to do nothing will mean, I think, the failure of the FDIC, double digit unemployment and wide-spread homelessness. Already tent cities are showing up in various parts of the country. It's going to get worse. Get ready for bad news I think.
