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Should We Complain About TARP or the Bank Bailouts?

July 31, 2012

It is quite possible that bailing out the banks could be necessary assuming they are “too big to fail” and they need to be bailed out to continue to provide necessary services. However, that gives us a good reason to break up the banks. Otherwise the banks will not be held accountable for their actions and will continue to rely on government bail outs. The actual way we bailed out the banks is the problem. It was crony capitalism. It was an unfair advantage for the rich.

Some considerations in favor of complaining about the bailouts:

1. “Frank Shostak explains that our Banking system is not part of the “free market” and it’s encouraged to be reckless thanks to fractional-reserve banking, the Federal bank, and too-big-to-fail guarantees.”

2. “Jon Stewart tells us how the banks used the bank bailout (TARP) to make free money by lending back to the government — to pay for the bailout!”

3. “Most of the biggest banks rejected TARP and paid it back early–before the banks became stable. Another financial collapse could be right around the corner.”

4. “The $245 billion bank bailout given out by TARP is a fraction of the $16 trillion bail out given by the Federal Reserve–which is not technically “part of the government.” The $16 trillion bailout was not only given to corporations in the USA, but also to foreign corporations. Citigroup was the largest beneficiary and got $2.5 trillion, which is astronomically higher than the $45 billion TARP offered them.”

5. “Since the end of 2008, Iceland’s state-controlled banks have forgiven loans for more than a quarter of the population, a total equivalent to 13 percent of its annual gross domestic product. Despite shrinking 6.7 percent in 2009, Iceland’s economy is projected to expand 2.4 percent this year and next, compared with 0.2 percent in the euro area. And while Iceland’s recovery does not provide a complete parallel to U.S. economic woes, the island’s nascent success does demonstrate how loan forgiveness can help reignite a struggling economy.”

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