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PONDER AND PREDICT America is a very entrepreneurial country. New businesses start up every day! For many people, owning and managing their own business is a tool for building wealth. Would you like to own your own company? What product or service would you offer? What does it take to get a business up and running and how do you build wealth through a small business? ______________________________________________________ ______________________________________________________
__________________________________________________________________________________ __________________________________________________________________________________ __________________________________________________________________________________ Wall Street: Reform or Not? In 2008, the American economy suffered a severe downturn after investment banks Lehman Brothers Holdings and Bear Stearns Companies collapsed. Hundreds of billions of dollars of wealth were wiped out in a matter of weeks, and the entire economy was put at risk because banks were afraid to lend and investors were unsure if there was any safe place to invest their savings. Lehman Brothers and Bear Stearns failed because they had invested large amounts of money in high risk investments, and disregarded numerous warning signs that their business practices were not sustainable. After the crash, the U.S. Treasury Department and the Federal Reserve Banks spent trillions of taxpayer dollars (called a “bailout”) to protect more Wall Street investment banks from collapsing as a result of similar mistakes. After the 2008 crisis, many journalists, politicians and economists claimed that the financial industry needed serious reform. They said that the Wall Street investment banks had broken rules by exaggerating the value and safety of their investments. Many claimed that these investment banks were able to get away with dangerous and unethical business practices because of their political influence. Large investment and retail banks donate hundreds of millions of dollars to candidates from both major parties. Furthermore, they often hire former government officials from the agencies that are intended to regulate the banks, like the Treasury Department and the Securities and Exchange Commission. Advocates of the legal reform of Wall Street claim that these practices give investment banks the political influence that enables them to ignore and violate current regulations and that these practices should be abolished or reformed. Advocates for the financial industry argue that these criticism are overstated and do not acknowledge the complex realities of their profession. Many financial professionals argue that they have a free speech right to PRODUCT PREVIEW DEBATE, PERSUADE, INFORM
THE 21st CENTURY STUDENT’S GUIDE TO FINANCIAL LITERACY 207
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