Bank Bailout Measures Phasing Out

Bank bailout measures are being phased out right now, says Treasury Secretary Timothy Geithner. Even though most of the bank bailout funds came under the Bush Administration, the Obama Administration still offered some help to banks, and had “placeholder” money set aside for “just in case.” However, Geithner says that the money probably won’t be needed going forward. (Although he didn’t say much about whether or not small still-struggling banks might see some TARP money.)

Geithner did defend bank bailouts, though, pointing out that large failed banks could lead to a systemic failure that would affect everyone else, reports MarketWatch:

“I wouldn’t give a penny to a banker, to benefit a banker,” Geithner said at a town hall meeting hosted by CNBC at the Newseum in Washington. “But if you let the system get to the point where people are taking their money out of banks, where people can’t get credit, where things stop, then you will see companies fail, unemployment rise, pension values fall by 30%, people having to work a decade longer than expected because of that damage.”

It is true that banks are an integral part of our economy. Indeed, banks provide the financing that keeps things working in our financial system and in other aspects of what we consider our “way of life”. Without banks, many businesses would fail, and the people they employ would be in trouble. Of course, that isn’t to say that maybe smaller banks could have picked up the slack. In the end, we’ll probably not know whether or not our financial system could have survived without the big guys.

Image Source: Federal Reserve via Wikimedia Commons