Question: Do Conservatives Think the $700 Billion Corporate Bailout Is Necessary?
Answer: The short answer is that conservatives don't think so.
Conservatives, who mostly favor free markets, believe that by allowing banks, hedge funds and the pension funds that hold them to succeed or fail on their own, the market self-corrects itself in favor of successful practices and in opposition to practices that don't work.
Theoretically, this is the best practice, but the reality of allowing such huge firms to go bankrupt could have broad, sweeping implications to average Americans who may believe they are uninvolved.
For example, when an insurance company like AIG faces bankruptcy, all of its assets get hauled into bankruptcy court. These assets may include its subsidiaries and ancillary companies it may own. This means that even though your mortgage insurance company or home-owner's policy may not have "AIG" on its statement, it may actually be part of the bloated AIG company. This means that its asset -- your policy -- could, and probably would, be seized by the court and sold off to the highest bidder, changing your rates and perhaps even refusing to pay your claims. This also goes for mortgage companies, money-market traders and pension fund companies.
Under the proposed bill being put forward by the Bush Administration, this may happen anyway. Further, the bill does not include provisions for transacting the buyup of financial assets out in the open. By failing to implement transparency into its own bailout, the government fall into the same traps in which the corporations found themselves, making the bailout pointless.
Barack Obama is backing the plan, but will also undoubtedly support the host of spending plans the Democratic Congress is already proposing to add to the pending legislation. McCain has advocated for the implementing openness into the plan to help provide more scrutiny.
Whether the federal bailout was necessary remains open to debate, but for conservatives, the only choice is to keep government out of private industry -- for good or ill.
Index to Bailout FAQs:
Conservatives, who mostly favor free markets, believe that by allowing banks, hedge funds and the pension funds that hold them to succeed or fail on their own, the market self-corrects itself in favor of successful practices and in opposition to practices that don't work.
Theoretically, this is the best practice, but the reality of allowing such huge firms to go bankrupt could have broad, sweeping implications to average Americans who may believe they are uninvolved.
For example, when an insurance company like AIG faces bankruptcy, all of its assets get hauled into bankruptcy court. These assets may include its subsidiaries and ancillary companies it may own. This means that even though your mortgage insurance company or home-owner's policy may not have "AIG" on its statement, it may actually be part of the bloated AIG company. This means that its asset -- your policy -- could, and probably would, be seized by the court and sold off to the highest bidder, changing your rates and perhaps even refusing to pay your claims. This also goes for mortgage companies, money-market traders and pension fund companies.
Under the proposed bill being put forward by the Bush Administration, this may happen anyway. Further, the bill does not include provisions for transacting the buyup of financial assets out in the open. By failing to implement transparency into its own bailout, the government fall into the same traps in which the corporations found themselves, making the bailout pointless.
Barack Obama is backing the plan, but will also undoubtedly support the host of spending plans the Democratic Congress is already proposing to add to the pending legislation. McCain has advocated for the implementing openness into the plan to help provide more scrutiny.
Whether the federal bailout was necessary remains open to debate, but for conservatives, the only choice is to keep government out of private industry -- for good or ill.
Index to Bailout FAQs:
- What do conservatives think about the federal government's $700 billion plan to bail out the financial market?
- Was the $700 billion corporate bailout necessary?
- What did John McCain hope to accomplish by returning to Washington to work on the Wall Street bailout?
- Is the Bush Administration responsible for the financial crisis of 2008?
