Federal Bad Economy – The Role of Government and Debt Relief

Federal Bad Economy – The Role of Government and Debt Relief

While the recession has affected many, the good news is that some people still have jobs. This is especially the case in the financial field, where a number of well-known firms have already announced that they are hiring. A lot of money is already invested and a lot of efforts will be needed to restart the economy.

The Federal Government in cooperation with the states has already made a number of rules, aimed at instilling discipline in the finance industry. One of these rules is that an investment bank cannot obtain a taxpayer guarantee for a client under any condition. The rule says that any bank cannot receive any kind of state support for one year. This is basically meant for banks that are looking to get a bailout.

Another important rule is that any bank, that is a bank that is looking to acquire a client must have at least fifty percent of its equity owned by private investors and must be profitable. Any bank, that fails to comply with this rule will be ineligible for a bailout. This rule is in fact not so strict because there are numerous banks that are already owned by private investors, such as Bear Stearns, which failed to comply with this rule.

Many states have enacted new regulations to control banks and avoid another bailout situation. California is the latest state to adopt this rule but has allowed a bank to operate even though it is over the limit. This is a clear example of favoritism in favor of big financial institutions. All the rules are aimed to instill more discipline so that financial institutions become better prepared for a recession. The goal is to prepare the economy for a new investment banking cycle, which should be a less risky and more likely one.

This rule has been criticized as an unfair advantage for large financial institutions. As stated before, this rule is the first step in a larger plan to make the economy a less risky and less risky place for banks to operate. The banks that are complying with this rule are simply proving that the economy can take a loss and still stay afloat. This is a clear sign that banks need to be restructured so that they do not face such choices. If you are an individual who wants to survive without using a credit card, then you should lobby your government to change this rule so that you can survive the next recession.

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