The government should rescue failing banks when necessary

Till May 23rd 2009, 34 of American banks have collapsed in only one year’s time. Some of the collapsed banks such as Washington Mutual Bank, Integrity Bank are big banks in the world, while because of the economic recession more and more banks will collapse in the following years. Should government rescue these banks? It becomes a very hot topic these days. Our group thinks that government should rescue these banks when it is necessary.
(Wu Bo)
Firstly, the government is responsible for national financial system while saving the bank is an active measure to execute its responsibility. It may be argued whether the banks are worth being rescued and if we should follow the market force. However, the government cannot risk suffering the result of breakdown of the whole financial system caused by the collapse of banks. In this sense, government should take every effort to save the bank in certain cases because if the banks collapse, the national economy may breakdown without the healthy financial system. Take Iceland for example, as we know the currency of Iceland collapse because of the collapse of banks of Iceland and the whole nation is suffering the result of it. The Icelandic government did not take any measures to save the banks when there were already some evidences suggesting the danger of the collapse of banks. When the banks collapsed, they began to realize the danger and try to save them. However, it was too late. The failure of national economy is owing to the government. Hence, the government should save the banks to execute its responsibility and it cannot risk the collapse of the banks.
(By Zhou Bin)
Furthermore, the government should rescue banks when necessary to guarantee the benefits of its citizens. As bank is the most important part of financial chain, its collapse will definitely exert great influence on the individuals who have deposit in the bank or have some other financial relations with it. For example, the City Bank was on verge of bankrupt. As one of the greatest banks with branches all over the world, its collapse would have far-reaching impact and would make its customers suffer. Hence, the American government came to rescue the City Bank, which can prevent the recession from running worse and can guarantee more people’s basic benefits. If the government does nothing and leaves all failing banks on its own, it will cause disorder and chaos to society as more and more people are losing money. Actually they are paying for the failure of the banks which should be the government’s responsibility. In short, ensuring the interests of the whole people far overweighs other factors we can consider. It is necessary for the government to rescue some failing banks.
(By Du Fang)
Some critics may mislead that the responsibility of the government is to rescue the financial system instead of some particular institutions. Critics think that the US government has taken enough measures so far, and it should let the weak institutions be eliminated from competition. In this case, the entire system will continue running. However, it may work but more problems will follow. If the government thinks that the financial system will return to normal by itself so that it does not rescue the failing banks, it will result in terrible consequences. For example, during the 1929 US economy crisis, if the government had not taken emergency measures to rescue the failing banks, millions of citizens would suffer from the financial loss. Worse still, the whole US would also fall back and might never flourish. Hence, the government must rescue the failing banks instead of letting it be.(by Zhang Jiao)
In conclusion, maintaining the well-working financial system and ensuring the people’s interests overweigh other factors and government should rescue these banks when it is necessary.
(Wu Bo)