Bailout Could Increase Confidence, Help Economy
Financial contributor Mellody Hobson explains the possible bailout effect.
Sept. 28, 2008 — -- Amid the confusion of the financial crisis and the government's hurried consideration of a bailout plan, many average Americans have been left without answers. "Good Morning America's" financial contributor, Mellody Hobson, stopped by the show today to explain what a bailout could mean for "everyday Americans."
In the short term, Hobson believes the market will "react favorably" tomorrow to the tentative bailout deal congressional leaders settled on last night.
"Anything to calm the market, that will be a great signal," Hobson said. "Markets will breathe a sigh of relief."
Hobson also said that the average American will be better off.
"This means we're better off. Specifically, this credit crisis has created a crisis of confidence. [A bailout] should reassure the everyday American that [the government] is doing everything they can."
As far as longer-term effects of the bailout, Hobson said the bailout could "stave off a recession" and save jobs.
Hobson also disagreed with the idea that providing more credit is, like some critics have said, rewarding failed institutions.
"Credit is necessary for economic systems," she said. "We are bailing out the U.S. economy. The CEOs that have made bad decisions have been wiped out in this process. Right now we're trying to deal with the issue at hand which is strengthening the U.S. economy."
