The Bank Bailout Means Taxpayers and Consumers Are On the Hook
The recent film The Big Short has focused America’s attention once again on the housing crisis of 2008 and the government bailout of the banks that followed. The price tag at the time was $700 billion to stabilize the banking industry. But as Forbes reported last year, the total government commitment (that is, the taxpayer obligation) is $16.8 trillion of which $4.6 trillion has been paid.
Proponents of the bailout like to claim, without offering much substantial evidence, that the bank bailout prevented a second Great Depression. Assuming for the sake of argument that claim is true, why are taxpayers continuing to prop up the banking industry through secret, ongoing bailout payments through the Federal Reserve? Moreover, does all this additional unreported assistance mean that the banking industry is less likely to fail now than it was in the run-up to the collapse of 2008?
Consider this: one of the most compelling arguments for the bailout was that banks had become “too big to fail,” meaning that insolvency for any one of the big banks could cause a ripple effect that would take down the entire economy. So, in exchange for all the financial support, did the federal government require the “too big” banks to break up into smaller, less risky banks? No, in fact, the government allowed further mergers, so that the largest 12 banks in America now control 70 percent of all bank assets. Worse still, despite overwhelming evidence of widespread criminal conduct that led to the collapse, no bankers have gone to prison.
So, in effect, the American taxpayers, many of whom lost their homes and/or jobs due to banker malfeasance, have picked up the tab for the bank collapse, leaving bankers to continue to abuse the system without any threat of consequences.
At DebtStoppers, our clients often ask our bankruptcy attorneys, “Where’s my bailout?” Unfortunately, our clients are not “too big to fail.” They are just everyday folks who’ve hit a rough patch, and Uncle Sam won’t step in to pay their bills. Fortunately, bankruptcy law does allow them to discharge debt and get a fresh start. If you’re carrying more debt than you can reasonably hope to repay, call us today at 312-913-0630 or contact our office online to schedule a free consultation.