RUNNING HEAD: BANK BAILOUT
Bank Bailout
Shu-Wei Wang
Dallas Baptist University
Bank Bailout
The U.S. federal government just gave money to the banks, but did not require them to use the taxpayer-funded federal bailout money to start lending. Banks said they couldn’t track how that money was being spent. What they did was hiding their mistakes, which dug themselves a worse hole. Nonprofit groups knew how unwise it is to give money to banks that were not able to use it wisely. There had been no accounting of how banks spent the money; therefore, the federal government should establish nonprofits accounting, which was the way for banks to be accountable. Recently, the government only pledged that the financial reporting for the second bailout would be more transparent, but there had been no guidelines for any process. What’s worse was the regulations had not yet provided enabling taxpayers to find out the money banks had been using. If the federal government could pass restrictions before giving money to banks, the transparency would be in place. Then, taxpayers would understand how they were helping the banks spent in a right way.
Due to the problems of the banks, the Treasury was putting efforts for a process to assess and boost bank lending to customers and business. The banking sector would undergo a check up called stress test (Brya & Daruvala, 2009) to examine if the banks had adequate capital to continue lending and if they could stay solvent if the recession had become worse. Another goal was to help banks cleanse their holdings of troubled assets. However, the Treasury didn’t yet confirm how much it would invest for the program. For boosting lending, the Treasury and Fed would buy high-quality securities to protect taxpayers against losses (Goldman, 2009). Also, they would monitor the use of the funds provided by government and unveil tighter requirements for banks receiving bailout funds (Goldman, 2009). For example, the banks must provide...