The Bail Outs of Presidents George W, Research Paper Example

U.S. federal government bailouts date back to the early 1970’s but really began to pick up momentum in 2001 when President George W. Bush bailed out the airline industry with the Air Transportation Safety and Stabilization Act in response to the terrorist attack against the World Trade Center on September 11. This bailout resulted in $5 billion in compensation and $10 billion in loan guarantees for the airline industry (“History of U.S. Gov’t Bailouts”). Then, in 2008, bailouts hit an all-time high when President Bush and the federal government helped to bail out the financial giant Bear Stearns, loan companies Fannie Mae and Freddie Mac, the American International Group (AIG), and the auto industry (GM, Ford, and Chrysler). Bush and the federal government also authorized the Emergency Economic Stabilization Act in order to help fight the financial crisis, and then helped to bail out Citigroup by making a $25 billion investment in the company (“History of U.S. Gov’t Bailouts”). When Barack Obama became President of the United States in January of 2009, one of his first bailouts was Bank of America which received $45 billion to help keep it solvent and in business. Obama then signed the American Recovery and Investment Act as a stimulus for the American economy. Some of the other bailouts made by Obama and the federal government includes Fannie Mae, AIG, Freddie Mac, and General Motors (“Bailout Timeline”).

In essence, there is not that much of a difference between the bailouts of President George W. Bush and Barack Obama. If the government provides a company or business entity like General Motors, Freddie Mac and Fannie Mae, and AIG with bailout money to help them stay solvent, then the only real differences are related to the type of businesses that received the bailout, in this case, banks, loan institutions, and the auto industry. Also, all of the bailouts are similar in that they involved the federal government, the President, and the U.S. Treasury, and that all of the bailout entities were either struggling financially or bankrupt, such as General Motors.

It appears that one of the most important differences is related to employment and jobs. For example, Freddie Mac and Fannie Mae as combined business entities employs about 3,000 people worldwide. The same holds true for American International Group (AIG) which employs about 2,700 people worldwide (Bezedcheck 245). In contrast, General Motors employs roughly 125,000 people worldwide with about 80,000 in the U.S. (Wright 175). Therefore, bailing out General Motors was a good idea simply because of the number of people that would have been affected if it had disappeared as America’s largest automobile manufacturer.

The overall effectiveness of these and other bailouts that occurred during the Presidencies of George W. Bush and Barack Obama has much to do with saving jobs and keeping the American economy on the path toward economic health and prosperity. However, I feel that bailing out a huge banking entity like Bank of America only helped the stockholders and the members of the board of directors who were already wealthy before the bailout. But if such a bailout is designed to only help those with savings accounts, CDs, and those with their entire life savings held within a given bank, then the bailout would benefit the economy and not some wealthy patron.

Bailing out General Motors was necessary because of the number of people that would have been affected by its bankruptcy, including my own father. Thus, the subject of bailouts would be a fascinating topic for an in-depth research paper on how bailouts affect the American economy and if providing a bailout to a privately-owned company is more of a benefit to the stockholders or its employees.

Works Cited

“Bailout Timeline: Another Day, Another Bailout.” 2015. Web. Accessed June 14, 2015.<https://projects.propublica.org/bailout/main/timeline.>

Bezedcheck, Bethany. Bailout! Government Intervention in Business. New York: Rosen Publishing Company, Inc., 2011.

“History of U.S. Gov’t Bailouts.” 2015. Web. Accessed June 14, 2015. < http://www.propublica.org/special/government-bailouts

Wright, Robert E., ed. Bailout: Public Money, Private Profit. New York: Columbia University Press, 2013.