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Thursday, September 25, 2008

Congress Bailing out Businesses

Congress today announced they have a bailout plan. On one hand - this is good news. My 401K may actually stabilize and do I dare hope - increase?

On the other hand, I'm not so sure this is a good thing.

I'm simplifying this, but here's some thoughts:
These banks are private businesses.
The employees of these banks (with management approval, of course) made loans to people with risky credit.
These people with risky credit defaulted and aren't paying back the loan
The banks are feeling the heat and don't have enough money
These businesses are now in serious financial trouble.
The government gives these private businesses that mismanaged their own finances OUR taxpayer money.

Does this really make sense? It may be best for the overall economy to stabilize these massive private banks, but if it is, what should happen to the bank executives? They are responsible for setting the policies that allowed sub-prime lending. They are responsible for making poor financial decisions.

I say we get rid of them and not pay them a penny for "golden parachute" clauses. Having an executive leave their position with millions in severance pay is ridiculous, especially since they ran these businesses into the ground.

What's really missing in this bailout plan is the repurcussion action. What actions do we need to take against those who are at fault? I'm not talking about the loan manager at the local branch - I'm talking about the strategic policy makers who set the line for what's accepted and what's not. They got us into this mess - they need to stand up and take responsibility, not our money.

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