Bailouts are only for big banks!

To date, the bailouts have been used to address the crisis. However, as noted, a lot of money from the taxpayers involved are usually offered to older players. For the recent crisis, were granted to larger banks. Now let’s analyze why and how they benefit from large banks.

In 2008, when Bush authorized the bailout of u.s. $ 700 billion, Treasury Secretary Henry Paulson (formerly of Goldman Sachs) immediately gave billions of TARP (Troubled Asset Relief Program) for large banks. Here, money flowed from the taxpayers to the organizations that caused the disaster. Many bailout recipient refused to explain the use of money and loans fell despite the fact that it should increase.

Regarding this, there are several reasons why the bailouts are only for large banks. Among them, believe one of them to be the key to bailouts and that would deposit insurance. Deposit insurance is basically a policy that guarantees savings of Americans, helping to prevent the executions of savings bank is withdrawn on a large scale.

Increase deposit insurance helps to increase confidence, giving investors a sense of security which did not lose their money. However, this also rewards banks to take more risks, because if savings are insured by the Government, the banks will be paid when you make mistakes, as they know that the Government will grant them bail-outs. As a result, bankers get saved to take risks while taxpayers pay more money to finance these bailouts not for their benefit. Most risks bankers commit more money they get for bailouts. So, if you’re a banker, you will want to take more risks?

Here, many may think that all the big banks have received bailout money. However, the truth is that only banks with political clout. This is because they can influence politicians to give them what they want. Governed by a corrupt system, win big banks with political clout and this situation is very similar to Russia that was devastated by its oligarchs.

To add, the big banks taking bigger risks usually, the highest chance of damaging the economy. So even if politicians are not willing to grant them bail-outs, they must do so for the sake of the economy. With the Government having no choice but to make do you think you can depend on to save?

We shall now proceed to inquire how rescue big banks benefit, in the United States, if a smaller Bank goes bust, the FDIC (Federal Deposit Insurance Corporation) uses the payout by closing the Bank, paying depositors while the founder and investors lose their money in start-up capital. This will allow big banks to acquire more market shares, using the cash to rescue as many banks available now falls.

In addition, a sell-off can occur where a large U.S. Bank bailout money to buy a bank that is struggling to increase its market share, allowing it to charge higher fees in the future and despite the creation of a financial crisis. Here, the incompetent gets rewarded while the little fish gets crushed with the advent of each new crisis.

So to conclude, with bailouts for big banks, we get more and more disadvantaged with every rescue because it forces the poor to pay the rich through taxes. With this, we have to protect our money from financial predators and leverage our resources to create more wealth.