Ethics and Federal Bailouts Essay Example | Topics and Well Written Essays - 500 words

Ethics and Federal Bailouts - Essay Example In Savings and Loan (S&L) financial crisis which lasted from 1989 to 1995 resulted in the closure of approximately 50% of the 3,234 S&L institutions (Phillips 2008). The government intervened in order to make good to investors through the creation by Congress of the Resolution Trust Corp (RTC). At the end of the day estimates revealed that it cost the government approximately $124 billion. The greatest bailout in the history of the federal government is the recue of the financial institutions in 2008 which cots $700 billion (Investopedia 2009). This is officially called the Emergency Economic Stabilization Act of 2008. In describing 2008 as a banner year for bailouts by the government Credit Loan (n.d.) indicates that the government provided funds totaling $29 billion to Bear Stearns and $150 billion to AIG and has promised $100 billion to Fannie Mae and Freddie Mac (two mortgage finance giants), in order to save the financial sector Investopedia 2009). Ethical Implications Relating to Misuse of Funds It has been reported in the media that these funds have been misused by politicians who give their close associates preferential treatment. According to The Blaze (2011) accusations have been made against Rep.