Was it a good idea for our Govt to help bail out the company partially responsible for the mortgage crisis?
by Mortgage Rates on Friday, November 19th, 2010 | 5 Comments
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No. Corporations want to be persons, so let them. If I make poor investment choices, I am the one who bears the consequences. It should be the same for companies.
No, not a good idea.
Fed decides what money to place in which areas to keep our economy running. Decision was that not finding a buyer for this one would hurt us all more than letting it go under.
Yes. The perception of Bear’s position is what took them down. Rumors of poor liquidity and credit issues at Bear caused a panic at banks and they called their money back in. Basically a bank run but on the large scale where other banks did it instead of people with their checking and savings. Bear going under could have destabilized the entire economy. Not to mention the Fed is partially to blame in the first place since they held rates at all time lows for so long ,and then increased rates to fast causing a credit crisis. Less restriction on GS E’s will help ease the credit crisis that large institutions will face due to home loan issues.
Bear Sterns investors actually got very little from the “bail out”. The purchase price of their stock was very little. The main beneficiaries were probably other financial instututions who would have lost money if Bear Sterns were allowed to go under. If it helps stabilize the economy, the benefits will far outweigh the costs. But you could make a reasonable arguement that any government interference is counter productive.