Friday, July 17, 2009

Big Banks Report Profits

The Washington Post is running an article entitled, "Bank of America, Citigroup Report Large Second Quarter Profits." The article states, "The largest banks are profiting from the success of some lines of business, such as trading in financial products and helping companies raise money. But the basic business of banking, lending money to borrowers, remains deeply troubled."

The article adds, "Both companies continue to rely on a range of federal rescue programs to raise money from investors, a key factor in their strong results. They also remain subject to close scrutiny by federal regulators, who have taken an active hand in management decisions."

1. Do you think that the government was right to help failing banks by backing them financially? Why or why not? Should the government continue to help banks if banks are reporting profits? What damage could occur if government withdraws it's financial support?

2. Do you think you know enough about the government bailout of large financial institutions? Why or why not? What question would you ask in order to learn more about these bailouts?

3.If you had to pick the two top priorities for government funding, what would you select? Why? Can you think of anything that the government is currently supporting financially that would stop supporting if you could control the government? If so, what?

4. After banks remain profitable and no longer need government support, how much money do you think that they should have to pay back to the government? (Base this on either a percentage or a multiple of the government investment within the bank.)

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