Monthly Financial Reports for Banks

An article from CNN (http://money.cnn.com/2009/01/20/news/companies/bank_data.reut/index.htm) writes The Treasury Department is requiring that all banks that received aid through the Trouble Asset Relief Program submit monthly reports on lending activities and data on mortgage-backed securities and asset-backed securities. Some of these banks include Bank of America, Wells Fargo, JP Morgan, and Citigroup. The purpose of the financial aid was to strengthen and restore lending activity for consumers and businesses, but some critics argue that banks are not taking full advantage of this bailout cash by not creating loans. Submitting these monthly reports should drive the banks to create more loans. Why is this important? Financial institutions, such as banks, are a vital component of our economy. They provide loans for consumers for houses, our single most valuable asset, automobiles, and other needs while investing in our businesses. When they fail, the economy fails. We are not going to dig ourselves out of this recession without restoring the strength of one of the basic building blocks of our economy.

Economic Stimulus

An article on CNN(http://money.cnn.com/galleries/2009/news/0901/gallery.stimulus/index.html), talks about how the $825 billion stimulus will affect us. The article states that the purpose of the stimulus is not to turn the recession around, not that it could, but to slow it down. Some effects will be seen immediately while others will not be visible for some years to come (ex. unemployment). Some Republicans are worried this stimulus will create a greater national deficit and that the best approach is in heavier tax cuts and lighter government spending. Democrats argue that the loss from increasing unemployment, economic output, and lost tax revenues will exceed that of the stimulus. It is my belief that the stimulus plan will be somewhat effective. The current state of this recession needs both a long term and short term solution. The stimulus provides a little bit of both. It is not the sole solution, but for a deficit of this magnitude, there is no single resolution. We need long term security, but people also need a means by which to satisfy their immediate needs.

Intro

Blogs for RMI 4750 Class