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Economic Bailout Essay

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Below is an essay on "Economic Bailout" from Anti Essays, your source for research papers, essays, and term paper examples.

The current proposed bailout plan of the United States financial system was not passed by congress this past week. The events leading up to the need of this plan are crucial in understanding why this plan was put on the U.S. in the first place and also why it was denied. The Bailout is at the skin and bones caused by the housing bubble burst, mortgage loans, and the banks involved in this. Subprime mortgages, or risky loans, created this problem due to people who could not pay these mortgages off. Originally the United States government was planning to take these financial services problems on case by case. They tried this with the first event being the bankruptcy of the Lehman Brothers, which was a global financial-services firm. It was the biggest bankruptcy in U.S. history. Another event leading up to the bailout plan was the $85 billion bailout of American International Group. On September 16th the Federal Reserve Bank announced they are creating a 24 month credit-liquidity facility worth $85 billion, a bailout to AIG. A final event before the proposed financial bailout plan was the Federal takeover of Fannie and Freddie Mac. These events are all attributed to the bailout plan, and the government has decided that it wants to take on all these problems at once with the denied $700 billion plan.
The bailout plan is essentially where the United States Treasury would buy up to $700 billion worth of mortgage-backed securities. Basically, the government will buy bad and good mortgages up so that the banks can get a clean slate and lend people money. Eventually this debt will come back to American citizens through taxes. All this would stabilize the credit market, and the economy. Many believe this bailout is necessary, while some are very much against it. This plan is considered a risky move, and could go in either way. The plan has a chance to prevent a deep economic recession, or it could backfire and go either way. The original proposal of the bailout of the...

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Economic Bailout. Anti Essays. Retrieved December 19, 2018, from the World Wide Web: http://cassandralynndesignllc.com/free-essays/Economic-Bailout-25760.html