Why You Needed the Banks Bailed Out

Bailout Politics

I understand the anger that exists for the financial institutions in this country. One group gets bailed out for horrific risk management and individuals are left to be foreclosed on. However, what occurred under both Republican and Democratic administrations was critical to the country. As someone who works in financial services, I would describe it as America avoided becoming a Quaker state.

Nationwide Society

Both major political parties have had a challenge explaining the bank bailouts to the American people. Considering they're politicians and not bankers I can understand that. The best way they've been able to handle describing it, is that the American economy would have been in much worse condition than it is now. For most people that's an abstract explanation of the events that occurred and what it's consequences were.

Lead Up to the Bailouts

During the lead up to the bailouts, I worked at one of the major banks (later laid off because of the crisis). I was there to see the fear people had when Washington Mutual went out of business. I was also there when people feared Wachovia would go out of business. The fear was gripping and I got to see the whites of people's eyes who had that fear. It scared me.

I was amazed to see Indymac Bank close its doors. Something I thought only happened in "It's a Wonderful Life" with Jimmy Stewart. But here I was watching it happen with other people across the country.

I fielded questions and began to wonder about the true meaning of FDIC insurance and what it really meant to average Americans. Something I never gave much thought to before.

Why the Bailouts?

So you may ask, what do you think it really meant and why do you say we would have become a Quaker state? In the interest of simplicity, I'll list these questions and thoughts and ask that you consider its nationwide and global implications as it relates to the banks and the people and organizations they serve.

- What little cash that is left in circulation gets hoarded by those who have it
- No one can pay anybody
- No cash exists in ATMs
- Your favorite store has no money to buy more supplies
- No cash is available for the babysitter
- No paycheck or pension to cash
- Box stores can't process purchases by customers
- No place exists to get a mortgage
- No place exists to get a business loan
- No place exists to get a credit card
- No checking account to pay your bills
- What happens to the water supply and its maintenance?
- What happens to the power grid and its maintenance?
- What happens to communication networks and their maintenance?
- Instead of gold this country would have gone back to the barter system

Again, the argument has been why can't the government bailout individuals the same way they bailed out the banks. The cold hard truth, do these same things happen or worry you if I go bankrupt?

Why You Needed the Banks Bailed Out