August 7, 2008

More banks should be helped out

There are calls from the former Chairman of the US Federal Reserve, Alan Greenspan to work more with the banks in order to allow them to keep going.

Just leaving the banks to suffer in silence could be disastrous for the world economy. However, at the same time can governments actually afford to bail all of the banks out?

However, this sort of banking crisis is not something that occurs on a regular basis, it may only happens around once or twice every century, but to do nothing could mean financial insecurity for many people and even business that are relying on the services of the bank.

Two cases have been highlighted as examples, Northern Rock in the UK and Bear Stearns in the US, without the support of their governments, these banks would have collapsed taking many other businesses with them.

Source [FT]