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Originally Posted by Sherry
Thanks David for a good explanation. I'm in Canada and we haven't been affected in the same way due partly to the fact that our financial institutions have lent money a lot more conservatively.
One thing that I've wondered watching the situation in the U.S. is why everyone wants to bail out the banks. Haven't they brought this on themselves through foolish lending? While I do believe that everyone is responsible for the decisions they make, I'm sure those banks were out there "selling" those loans to sub-prime lenders and trying to get the maximum mortgage sold for each client - luring them with these mortgages that the banks should have known the lenders couldn't afford.
Aren't the banks just getting what they deserve for being greedy?
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Hi Sherry,
Welcome to the community and thanks for the comment.
I think that you will find that if you speak to the average person in the US they will tell you that they are in agreement with your line of thinking that the banks brought this on themselves and therefore should be left to suffer the consequences.
One thing that I don't think is fully understood by those who make that argument however is how much they would be affected if a bank the size of Bear Sterns was allowed to fail. Remember that a bank is not like a car company or a large retail store who if they go out of business no one is really affected save the people directly related to the company. If a bank that size is allowed to fail in the current environment it would most likely freeze up the credit markets potentially causing a financial meltdown the size of which we have not seen since the great depression. This would affect not only US citizens but people all over the world.
So while I don't think there are any 100% right or wrong answers on this one I think there are strong arguments on both sides and if there are other takes on this I encourage them to be posted below.
Best Regards,
Dave