Thursday, October 9, 2008

Why Don't We Just Let the Banks Fail? We Tried That Once

As people get increasingly edgy about the state of the economy, it's important to remember that we are not exactly in uncharted territory. We've been here before. It was at the start of the Great Depression.

We let the banks fail then -- by the hundreds. And boy, we sure showed those bank owners, didn't we?

That's what came to my mind when I read the Livingston Press and Argus story for Thursday (Oct. 9, 2008) regarding Republican Mike Rogers' discussion of his vote against a $700 billion plan to recapitalize the American banking system.

Why not just let the banks fail and teach them a lesson, he was asked.

Rogers' reply was, "I felt we were rewarding the very same people who got us into this mess."

The first thing we need to do is get out of this mess. I didn't hear an alternative plan from Rogers for doing that. All we got was optimism that we had reached the bottom, and no plan for getting us up off the bottom.

While it might feel good to teach bankers a lesson, many other innocent people may get hurt in the process.

General Motors and Ford were not to blame for the credit crisis, but won't they suffer if the banks are "taught a lesson" and people can't borrow money to buy a car? How does it help our local economy if people who do have money to buy a house can't get a loan?

Sometimes what makes us feel good really isn't good for us in the long run.

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