Designed for the Business, Non-Business, Economics, Non-Economics Major(s) to Explore and Understand a Variety of Real-World Issues.
Wednesday, October 20, 2010
The Beginning of TARP
We learn about the theory behind TARP and we read about it in the paper, but this video really explains how things really started. Please take the time to watch the video and be ready to discuss it next week.
I must admit that I was that part of the public that looked at the investment bankers in disgust. This video has opened my eyes to so much. If the general public viewed this the perception of the Wall St banks would change. I can't help but wonder what would have happened if Lewis did not take the Lynch deal, would the economy have crashed as predicted by Paulson? Paulson predicted that the market would be fine because of the merge but that was proved false. I feel sympathy towards Lewis who was forced to accept TARP 2x and to continue his deal with Lynch when he did not want to but I agree with Paulson and I believe that there may not have been no other way. This whole situation illustrates what happens when people are too greedy...certain banks being lax on mortgage loans and giving them out freely (greed)...leading to the housing bubble, leading to Lehman bankruptcy than Lynch merge (greed-Thain didn't initially want to sell the company) ,comp (greed!) It's how lewis's quest to become the largest bank in the world contributed to its downfall.
After watching this video, my whole perception of conducting a free market economy appears obsolete. I think that the timing of the banking crisis is just as crucial as the collapse itself in terms of nationalization of U.S. banks. With a new presidential nominee (Obama) running for office, he was able to make all of the banking executives look like the "bad guys," and gain the support of voters for more government control. Although many banking executives (such as Thain) were extremely greedy, I feel as though Ken Lewis got the short end of the stick. Ken was essentially forced to taking the TARP money, and also to complete the merger deal with Merrill Lynch. The future of a free market economy looks grim to say the least.
Michael Lam MWF 2-250 This was a really informational video. I can say that I did not know very much about TARP, and it was an eyeopener to see how much the government can effect the free market. TARP seems to have been the emergency option for Henry Paulson, which was understandable since the market went south after the Lehman Brother's bankruptcy. But it was really unfair for Paulson to "force" these banks into taking the money.Hearing that Paulson had the option of exposing these banks for being unpatriotic if the banks did not accept the money was also a little disturbing. But I felt that Ken Lewis was the one that really got hurt through this process. Though his greedy desire to become the biggest bank put him in to that situation, it was unfair for Paulson to force Lewis to go through with the deal. The merger was suppose to nullify the effects of Lehaman Brother's bankruptcy, but I guess Merrill Lynch's own problems were too much for the merger to overcome. But I wonder what would have happen if there was no merger, would our economy be even worse? Would the government try to get more involved? If the government did not get involved, would the economy have any chance to bounce back? Overall I really believe that the government could have found a better solution than tarp.
Before watching this video, I never completely understood why the banks were failing and the situation on Wallstreet. I thought this was very interesting. TARP definately seemed as if it was the only solution the government was willing to use. They forced the banks to accept TARP money which did help the banks become more stable. I also found it interesting that Lewis' Bank of America was stable and because he made the decision to become the largest bank in America, his whole world turned upside down very quickly. He put himself in the situation where the problems of Merril Lynch became his own problems.
*My comment for TARP can be found under Debts and Defecits-- this is my response for Debts and Defecits since i micplaced my other post.
In class we discussed how its practically impossible to "cut" defecits. To spend your way out of bad times is not logical. You will continue to be in debt. Spending should be cut so debt can be reduced. Granted, this would take a lot of time but pulling a country out of a recession always does. Most of the time you can't tell if a presidents decision is a good one until years down the road. It's hard to say what will pull America up, but cutting defecits doesn't seem like the correct path.
Since I am completely oblivious to the world around me, especially economic situations, so I understood the banks were failing but I never understood why or what the events were and the involvement of TARP. After watching this video I now understand how it was like a domino effect where the Leihman(sp?) Brothers went bankrupt and that meant everyone else would too, and in efforts to prevent that Lynch went to Bank of America to buy them. This did not help though because of Paulson and making the banks sign the TARP policy in efforts for the government to control banks. I think this is a good idea, but then again politicians are crooks—and Paulson was a “wall street shark” which makes me think what was really in his best interest? Money going to the government and the banks keep needing more from the government, or letting the banks continue on the free market. It would have been interesting to see what would have happened because some of the banks involved in the policy were not having issues at least yet, so who knows what would have happened.
N'keya Peters (Tue, Thur 8am-9:20am)
ReplyDeleteI must admit that I was that part of the public that looked at the investment bankers in disgust. This video has opened my eyes to so much. If the general public viewed this the perception of the Wall St banks would change. I can't help but wonder what would have happened if Lewis did not take the Lynch deal, would the economy have crashed as predicted by Paulson? Paulson predicted that the market would be fine because of the merge but that was proved false. I feel sympathy towards Lewis who was forced to accept TARP 2x and to continue his deal with Lynch when he did not want to but I agree with Paulson and I believe that there may not have been no other way. This whole situation illustrates what happens when people are too greedy...certain banks being lax on mortgage loans and giving them out freely (greed)...leading to the housing bubble, leading to Lehman bankruptcy than Lynch merge (greed-Thain didn't initially want to sell the company) ,comp (greed!) It's how lewis's quest to become the largest bank in the world contributed to its downfall.
N'keya Peters (Tue, Thur 8am-920am)
ReplyDeleteIt's funny how Lewis's quest to become the largest bank in the world contributed to his downfall...
After watching this video, my whole perception of conducting a free market economy appears obsolete. I think that the timing of the banking crisis is just as crucial as the collapse itself in terms of nationalization of U.S. banks. With a new presidential nominee (Obama) running for office, he was able to make all of the banking executives look like the "bad guys," and gain the support of voters for more government control. Although many banking executives (such as Thain) were extremely greedy, I feel as though Ken Lewis got the short end of the stick. Ken was essentially forced to taking the TARP money, and also to complete the merger deal with Merrill Lynch. The future of a free market economy looks grim to say the least.
ReplyDeleteDan Moore (MWF 2-250)
Michael Lam MWF 2-250
ReplyDeleteThis was a really informational video. I can say that I did not know very much about TARP, and it was an eyeopener to see how much the government can effect the free market. TARP seems to have been the emergency option for Henry Paulson, which was understandable since the market went south after the Lehman Brother's bankruptcy. But it was really unfair for Paulson to "force" these banks into taking the money.Hearing that Paulson had the option of exposing these banks for being unpatriotic if the banks did not accept the money was also a little disturbing. But I felt that Ken Lewis was the one that really got hurt through this process. Though his greedy desire to become the biggest bank put him in to that situation, it was unfair for Paulson to force Lewis to go through with the deal. The merger was suppose to nullify the effects of Lehaman Brother's bankruptcy, but I guess Merrill Lynch's own problems were too much for the merger to overcome. But I wonder what would have happen if there was no merger, would our economy be even worse? Would the government try to get more involved? If the government did not get involved, would the economy have any chance to bounce back? Overall I really believe that the government could have found a better solution than tarp.
Before watching this video, I never completely understood why the banks were failing and the situation on Wallstreet. I thought this was very interesting. TARP definately seemed as if it was the only solution the government was willing to use. They forced the banks to accept TARP money which did help the banks become more stable. I also found it interesting that Lewis' Bank of America was stable and because he made the decision to become the largest bank in America, his whole world turned upside down very quickly. He put himself in the situation where the problems of Merril Lynch became his own problems.
ReplyDeleteJessica Catanese
TTR 8:00
*My comment for TARP can be found under Debts and Defecits-- this is my response for Debts and Defecits since i micplaced my other post.
ReplyDeleteIn class we discussed how its practically impossible to "cut" defecits. To spend your way out of bad times is not logical. You will continue to be in debt. Spending should be cut so debt can be reduced. Granted, this would take a lot of time but pulling a country out of a recession always does. Most of the time you can't tell if a presidents decision is a good one until years down the road. It's hard to say what will pull America up, but cutting defecits doesn't seem like the correct path.
Hattie Cheek
American Economy
TR 8AM
Since I am completely oblivious to the world around me, especially economic situations, so I understood the banks were failing but I never understood why or what the events were and the involvement of TARP. After watching this video I now understand how it was like a domino effect where the Leihman(sp?) Brothers went bankrupt and that meant everyone else would too, and in efforts to prevent that Lynch went to Bank of America to buy them. This did not help though because of Paulson and making the banks sign the TARP policy in efforts for the government to control banks. I think this is a good idea, but then again politicians are crooks—and Paulson was a “wall street shark” which makes me think what was really in his best interest? Money going to the government and the banks keep needing more from the government, or letting the banks continue on the free market. It would have been interesting to see what would have happened because some of the banks involved in the policy were not having issues at least yet, so who knows what would have happened.
ReplyDeleteLast comment was Jenna Smith TR 8am
ReplyDelete