Why should the taxpayers bailout the major lending institutions due to poor lending practices?

BY busadmin  November 28, 2007 at 6:20 PM EST

Question/Comment: Housing prices skyrocketed to double in 3 years and everyone thought they were rich, and went out and spent the money.  Now the market corrects 30 percent and everyone discovers that it wasn’t real. Why should the taxpayers bailout the major lending institutions due to poor lending practices? Why should the tax payers bail out the home owners that purchased way more than they could afford?

Paul Solman:
Because if there’s a major meltdown in the financial markets, that hurts taxpayers too. Hurts us all a lot. In the ’30s, the Fed DIDN’T bail out some lending institutions because they thought they were failing “due to poor lending practices.” The Great Depression ensued. Maybe for that very reason.