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Bank Bailout

In: Historical Events

Submitted By beto20
Words 319
Pages 2
2008 Bank Bailout Economic crisis that strike a nation don’t happen from night to dawn, several factors attribute for an economic crisis to happen similar to a meltdown. This was the case for the 2008 economic crisis in America since the great depression that collapsed the stock market in 1929. Several are needed for a market to crash and crumble in pieces, risky investments, reckless decision making, and investments taking on a greater risks in hopes of greater returns are believed to be what caused the 2008 economic crisis in America. I believe that the bailout plan helped in the short term but will have its negative effects in the long run. The private sector in America especially the banks have a huge impact on the economy; there’s a lot of competition in that aspect of the economy. I believe that when the government intervenes in a free market economy and in the private sector it has to be with rules, regulations and under certain circumstances. The banks cannot just take risks loan money without checking first if the person can pay. For every act there is a consequence that has to be faced. The banks can’t just expect for the government to save them every time the feel they will go bankrupt. The government has stepped in several times since the beginning of 2008 to assist failing financial institutions. In September 2008, the federal government extended $85 billion to the American International Group, the country’s largest insurer and one of the world’s largest companies. In the same month, the federal government took two government-sponsored enterprises, Fannie Mae and Freddie Mac, into receivership in order to stabilize the financial positions of those organizations. Since the failure of large financial institutions, coupled with decreased consumer spending, could result in a significant decline in economic growth and possibly economic collapse, the

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