'Bank Failures over Last 25 Years Essay\r'

'The rims began to fail because of misappropriation of cash in hand and loose lending practices to the majority of the US citizens living(a) above their means. The government estimated 2,657 closures from edge failures from 1987 to 2012 (http://bankvibe. com). Currently, there is a total 7,074 FDIC insured banks (http://www. mybankertracker. com/banks). This caused was from credit stipulations were lowered to concede the subpar credit working the Statesns to obtain personal loans, car, homes or other amenities.\r\nMost banks were very stable only were not prep bed for the financial bubble to break down in the distance near future. Moreover, in my look with working for a few financial institutions, I observed the credit parameters amended to fit a customer’s financial state. These loans stipulations were as follows: no documentation, no income, no assets, or no chip job; underwriting went only off credit rate in some cases. The sm in tout ensemble, mid-size, and cor porate banks argon all competing for the public’s business which caused disarray of blighted banking decisions.\r\nHence, the banks that failed from 1987 until present time in inquirying last 25 geezerhood; we don’t read very much about these failures in our daily newspapers, simply comely; there is an over abundant of banks failures every twenty-four hours and this has exit very common (www. davemanuel. com/history-of-bank-failures-in-the-united-states. php) Nevertheless, these banking behaviors caused a broad failure of mortgage banks and commercial banks.\r\nThis caused the government to become very involved when Freddie Mac and Fannie Mae were affected by these lending behaviors (Johnson, 2010, p. 4-28). My research will display the dilute of weakness banks over the last 25 years and data will give insight on the numbers of banks. The Federal Reserve had centralized banking righteousness to save the banks, they deemed also big to fail. The depositors de cide to concurrently withdraw their funds from banks, which resulted in a bank panic. If several banks experience these actions at same time, this throws the banks into a bank panic.\r\nThe Feds loan the banks money at a discounted rate to sustain these indiscretions (Hubbard & O’brien, 2010, p. 37). Consequently, the US Congress started holding hearings, and questioning these huge corporate banks whose bonuses, incentives, and other loose business practices. These banks closed, sold, or integrated with other banks to become inevitable reality of flunk (NAOAKI, 2011, p29). The investment banks were also involved in the purchase and selling of bundled mortgages, investments, or other banking products to raise their capital. Lehman Brothers, stick out Stearns, and Countrywide were guilty of such practices as seen all over the TV national news.\r\nThese companies get to been all sold or closed down by and by the hearings on Capitol Hill. Currently, In order to resol ve this crisis, banks have drastically changed their lending practice and the closure of failing banks has slowed down. Corporate banks were also beginning to receive stimulant funds to save them from failing. The government found themselves in a position of using the Feds to prevent ruinous melt down of financial industry.\r\nThe 12 districts are replenished to keep the general public getting loans; thus, care money in circulation (Hubbard & O’brien, 2010, p. 438). alone banks did not take the input signal funds, but devised a plan to prevent failure. Therefore, banks had to pay back the loans in the billions, but were not charged interest if they give the funds back early. The small to mid-size banks were left to fail, because they were not too big to fail. A double regular was shown to small businesses the backbone of America (http://economics. bout. com/).\r\nA bank of ineffective practices has shown small mom and pop banks they should not try to compete with C orporate Banking in America. They are not going to be bailed out, and allowed to fail. These small or mid-size banks are microeconomics not in macroeconomics equation of America big businesses. In conclusion, the bank failures are pregnant to our economy tremendously regardless the size, from the housing market, investments, or checking/savings accounts.\r\nThe Feds saved the banks worth saving to pull ahead the economy and slow down inflation. Perhaps, further research conducted to answer the following questions, and ask the questions: Do you gestate if people were given the stimulus funds instead of the banking institutions? What kind of economic boost would banks have, if the citizens were given stimulus funds? How does the government determine who receives funds to survive a financial set back? wherefore are parts of corporate America deemed too big to fail?\r\n'