AWD -
If we the people and the government allowed the “chips to fall where they may” in terms of the current crisis, the banking industry would nearly collapse. Don’t forget these are publically traded companies, thanks to the small tax on capital gains few things in the market are viewed as “long term” investments. As such, companies need to post growth, profits and positive outlooks. Without that investors run, company value nose dives and when this happens to some of the biggest companies in the world it really does trickle down.
So now we have most of the major financial institutions in serious trouble w/ investors, they can’t make new loans because they can’t afford the losses. The result? No new credit no matter how low the fed goes on interest rates (which, keep in mind only drives general inflation up and makes oil prices skyrocket). No new credit means a massive decrease in spending, both consumer side and corporate side. This creates a huge risk of depression and could be a catalyst for massive unemployment as cash flush companies and individuals brace for the worst.
In comes the government, not beholden to wall street traders or ROI driven investors. The government can negotiate terms banks and their investors can’t, they can do this while raising interest rates, they can do this for the LONG term. The result will be a much more stable economy, decrease in inflation, and the ability to give new credit.
This means companies like yours stay in business. People stay in their homes and are able to ride out the home value market, the reduction in foreclosures means general home values rise. Will it cost you a few dollars in the long run? Sure, maybe even a couple thousand…but guess what? That couple thousand is a drop in the bucket compared to the losses you would take if the country went into depression.