III. Opposition’s point 1, refute, 1st support for thesis.
a. Credit Card Act of 2009
b. No Change at all, Banks still operating the same way
IV. Opposition’s point 2, refute, 2nd support for thesis.
a. Creation of TARP
b. $12.2 trillion dollars of tax dollars were spent wrong
c. TARP allowed many banks to allow credit again
d. A majority of banks have paid back TARP money
e. After TARP, Economy boosted
V. Opposition’s point 3, refute, 3rd support for thesis
a. Toxic assets cannot be removed easily
b. Government takes more cost, then expects
c. Economy will decline with removal of assets
VI. 4th support for thesis
a. Increased national debt
b. Politicians were forced to sign this bill
c. No solving of problems
“Let’s hope we are all wealthy and retired by this house of cards falters” (Bloomberg, 2007). The credit crisis is known as the “House of Cards”, for years the banking industry has transformed many American lives, which has resulted in a troublesome economy. Many factors led to the credit crisis, such as the rise and fall of the housing market, and inaccurate credit ratings helped to create the sub-prime mortgage crisis (Issues & Controversies, 2010). Low interest rates developed easy credit, in which people could get a mortgage and credit cards based on inaccurate credit ratings with the creation of sub-prime mortgages. People have the ability to own a home, with no down payment or fixed income. In August of 2007, the United States began a loss of confidence in securitized mortgages, which resulted in the Federal Reserve injecting $20 trillion dollars into the financial markets to ease the situation (“Obama Sends Warning to Big Banks, 2010). The most important question to be answered in the decade is “How a loss of $500 billion dollars from the sub-prime mortgage resulted in a $20 trillion dollar loss in equity values and an entire shock to the world’s financial system” (Woellert & Kopecki, 2007). The United States government should not have given the financial institutions bailout money, because financial institutions using loop holes in the system to take advantage of their clients, financial institutions operations have stayed the same, and the government’s belief of a tree market economy goes against the bailout.
The credit crisis is a “worldwide financial fiasco, which resulting from sub-prime mortgages, Collateralized Debit Obligations, Frozen credit markets, and credit default swaps” (Jarvis, 2009). The credit crisis brings two people together, people on Main Street and investors. The people on Main Street represent their mortgages or houses, while investors represent their money, which also represents big institutions such as pension funds, insurance companies, mutual funds; sovereign funds (Jarvis, 2009). These groups brought through the financial system, composed of banks and brokers on Wall Street. As a result of the September 11th attack, Chairman Allen Greenspan lowered interest rates only to 1%, to allow credit to flow; however, investors have a very low return on investment (Snow, 2008). By lowering interest rates, it allows for banks to only borrow money from the Federal Government for 1% plus the surpluses from the Asian and Middle East market, which makes borrowing money easy for banks and to allow leverage (Adding up the Government’s Total Bailout Tab, 2009). The definition of leverage is, “borrowing money to amplify the outcome of a deal” and is a major way banks make their money (Princeton University, 2010). Wall Street takes out a majority of loans and uses leverage to their advantage, and a heavy flow of capital comes in. In which return, they pay back their original investment. The investors notice that Wall Street is making money very fast, and they want to create a new product to sell to Wall Street. The...