Will the loan money available in the governments bailout bill help companies in bankruptcy such as Lehman Bros?





One thought on “Will the loan money available in the governments bailout bill help companies in bankruptcy such as Lehman Bros?

  1. Paul in San Diego says:

    The bailout money is supposed to be used for financial companies to give loans to other businesses, so they can continue their business operations. Without these types of loans being available, more businesses will go bankrupt.

    Companies like Goldman Sachs invested heavily in bad mortgages. When people began foreclosing, they ran out of capital to make such loans (called overnight loans) and they had to cash in assets at deflated prices just to stay afloat and meet their own financial obligations. Now they’re broke and have to file for bankruptcy.

    What the bailout will do for them is to provide them capital to continue operating. And, if companies like Goldman Sachs can continue providing loans for other companies, those companies will be able to survive this recession.

    That’s what they mean when they say the bailout is required to prevent the collapse of the economy, since so much of our economy is daisy-chained together and it’s all held together by the major financial institutions.