Financial Crises of the Period of 2008 in the US - Essay Example

The loans were even provided without taking into consideration the credit ratings of these individuals. When crises started taking place and individuals started losing their jobs, these individuals became unable to pay off their debts and banks started experiencing failure to recover their money (Friedman, 2011). Due to this banks started experiencing liquidity issues and were unable to have the amount of money required to remain in business and were on the verge of its default. As a result of this, the government came out with a bailout plan to help the banks from experiencing bankruptcy. The bailout can be both beneficial and disadvantageous at the same time. Most governments tend to bail out those banking institutions that are too huge to fail and their failure can further increase the economic crises (Scott, 2012). But such policies are anti-competitive in nature. This is because when the government bails out an organization, it tends to hold certain shares of the entity and has the right to make decisions. Read More