Most of the angst over the hundreds of billions of dollars being granted to banks in the great bailout of "08 and "09 is the mere fact that we the people are getting tired of making the rich richer while we all get poorer. So in order to grasp why it is that a Federal Bailout of the banking system was required and in order to get okay with the fact that it's going to cost us a lot of tax revenue, we need to have some sort of assurance that the fat cats aren't merely getting fatter on the deal. To do that, it is important to understand who it is that profits the most from the federal bailout money. .
Believe it or not, the one who profits most from the bailout money might actually be the consumer! Before you light your torch and join the restless natives in the city square, understand first, why the money was required in the first place. It's not that the banks didn't screw up. They did. They loaned a lot of money to people who were tremendously less than able to keep up with their payments should the economy take a downturn, which it did. When the housing bubble burst, a lot of those people found themselves paying on loans that were worth more than the homes they had purchased. Furthermore, many of those loans were already at up to 125 percent of the home value. It was simply cheaper for many of those people to declare bankruptcy and walk away than it was to stay put and pay their loans. The banking industry bet on a robust economy and ascending home prices and they lost the bet, jeopardizing themselves, and the entire United States Economy. .
Whether the banks should have been more fiscally responsible is not in question. Everyone agrees that greed and loose lending practices lead to the catastrophic downturn that required a financial bailout, and the result was that when the smoke cleared, we were left with a new banking system, planned or otherwise. The independent banks that could once loan money competitively at their own discretion were bought out by holding companies on whom there are far stricter regulations.
