Banks Invest To Fail

                 Since the start of the Global Financial Crisis  in 2007 we have seen  a total of over 300 banks  go down in the U.S. alone. Banks have been dropping like flies since the recession because of those worthless loans they handed out to people who didn't have the money to pay them back. The bigger banks like Citi, American Express, and Wells Fargo have been bailed out by the government while they leave the smaller banks to
crumble and fade out. These banks were the catalyst to Global Financial Crisis because of their greed to earn as much money as possible.

               The start of the recession can be linked to the subprime mortgage crisis. "Banks and lending institutions such as Country wide, Washington Mutual, Fannie Mae, and Freddie Mac adopted the idea of giving subprime mortgages to people who had no down payments, poor credit, or inadequate regular income" (Johnson, 140). Banks started giving out loans to people who weren't qualified and unable to pay them back. Who wouldn't take the loan when these banks made it seem like there was no harm in taking it? Due to the huge amounts of mortgages being handed out, housing prices started to drop and interest rates started to skyrocket. These two conflicts led to many foreclosures and made all  these subprime mortgages worthless now. This high risk investment by these banks completely failed and they have no one to blame but themselves.

Gary Schilling of A Gary Schilling & Co. has predicted that we will have another 20% decrease in housing prices in the foreseeable future.

              Those failed subprime mortgages were just the start of a chain reaction. The banks started to put these worthless mortgages in the market as derivatives in hope of having someone invest in it. Derivatives are contracts that acts as an underlying asset like stocks, bonds, or marketing indexes. Suspiciously rating agencies gave these derivatives great reviews causing investors to invest in worthless stock. These ratings even had insurance company AIG fooled and they invested billions of dollars that went down the drain. "Critics fault the United States for allowing companies to merge, grow, and develop financial methods that jeopardized the whole economy, treating the world as a vast "gambling casino" and exporting a culture of corporate irresponsiblity" (Johnson 143). High risk investments that failed to make these big corporations more money has brought our entire economy under the ground and keep us there for the forseeable future.

               One concern that continues to confuse economists and citizens is the government continuously helping the big corporations. "Instead, they say, as unemployment rises and home foreclosures rise, the federal government should improve the economy overall by directing money to people who really need it"( Johnson, 144). No reason to add more money to these CEOs who earn more than enough money as it is. Stabilizing these corporations isn't going to garuntee a positive result because in the end those corporations only care about their wallet and not anyone else's. We need to first stabilize the real estate crisis because citizens spend most of their income on house expenses. We need to help the needy and not the wealthy.