When someone needs money they go the bank and get a loan. Said person pays back loan plus interest based on their credit profile. Why can't it work the same way for the banks?

When banks need money they go to the government. The government checks out their credit profile. Their credit sucks due to the mortgage crisis (which was a violation of so many ethical business standards it's ridiculous). So now the banks should have to pay a high interest rate, let's say 20% because a lesson needs to be learned. When you punish someone the punishment only works if you take something away from the person which is of value to them. For these greedy people that's money.

So the plan is to give them $700 billion. I say tax them at +20% compounded monthly over 30 years. This will result in more than268 TRILLION dollars for the government over the 30 years.

There should be strict multiple oversight committees overseeing both the spending of the $700 billion from the government and also the money collected by the government and also to make sure the banks don't try to make the citizens pay for their mistakes by invoking more fees or higher interest rates.

This should be a great oppurtunity for the government to become fiscally responsible. It's also a great time for the government to crack down on greedy business individuals and limit their monopolies.

Obviously 20% is probably too high but seriously how about 10% compounded quarterly over 30 years still results in $13 trillion dollars in revenue.

Wouldn't it be nice if it could be this simple.

The US government doesn't have that much money either, that means that we also have to borrow the $700 billion dollars. We have to pay back that money at a rate that is usually about 5% so we wouldn't be making nearly that much money.

The real problem isn't that the banks are out of money its that they bought billions of dollars worth of loans that are now worth 20-50% what they paid for them. This means that they just lost a s**tton of money and they are essentially asking the government to buy these loans back from them at more than they are worth so that they don't have to lose as much money. Some reasons why this is stupid include:
1. The government doesn't come and take over companies if they are making too much profit, so why should they take them over if they are making huge loses.
2. $700BN is a a lot of money, borrowing that kind of money really really inflates the dollar. If our currency inflates too much then we will be a much worse situation than we are with the credit crisis.
3. This teaches terrible business practices. What kind of message is our government sending if when a company does something horrible and f**ks our economy up this badly then the government will simply bail it out. The CEO/CFOs/etc of these companies have no responsibility, not a single one of them is going to jail. In fact, most of them are making millions of dollars while the people that had faith and invested in these banks are losing millions of dollars, they are basically getting rich off of F*CKING the rest of the county over.

As it is right now the banks are basically saying the government has to bail them out because without them the country cant function, which is probably true, but I would also like every single person responsible for this s**tfest put in jail so that 10 years from now another CEO doesn't do the same thing.

Edit:
I also just did the calculation and I'm pretty sure that even with 20% annual interest compounded monthly over 30 years the total amount the banks would end up paying back on a 700BN loan would be 1.64781328 trillion dollars.

Why not borrow more, were already:

$9,856,135,220,021.70 in debt, as of 28 Sep 2008 at 09:16:28 PM GMT.

According to:
http://www.brillig.com/debt_clock/

It sounds like the geovernment has already decided to bail out the banks and their just working out the details and who gets control over the $700 billion.

We've already dished out a lot of money that we're never going to recoup for the war at least this way we have a chance to see some sort of compensation.

I understand the value of the loans is inflated and the banks are trying to cover their losses but whatever amount the government decides to loan the banks I think they should loan it at a high rate of interest so other companies realize that these types of business practices will not be tolerated.

All the heads of the companies that we've heard in the news are now under investigation by the FBI. I'd like to see them all fined excessively and I agree I'd like to see them do at least 10 years prison time.

The inflation will be bad at first but it's already bad. At least this way in the long term the government will make a sizeable profit for once.

What program and formula did you use to calculate the compound interest? I just tried it again for a 6th time and I still get 2.687748E14.

Some of the plans call for less than $700BN though, which could be significant. Others also call for private money to be used rather than public money. Also, last time I read the bailout was extremely unpopular (like 10-15% of the country in support of it) so they are probably trying to find some way to do it without pissing the country off.



I agree that this would work but the government would have a hard time selling this as a "bailout". If these companies borrow money at 20% for example they are going to have to earn at least 20% back on that money to make a profit, which I imagine is pretty hard.





Yeah sorry I did my calculation wrong, I think you are right.