As the fabled $700 billion dollar bailout plan staggers through the White House and Congress, I’d like to offer an alternative and cheaper plan for restoring investor confidence in Wall street, helping stablize banks and providing real relief for millions of American homeowners.
It is breathtaking in its simplicity.
The Fed should buy all the bad mortgage debt at some percentage on the dollar. Then, the Fed should turn around and sell properties back to home owners at fair price. If the feds end up unable to unload all the property they own, big deal — it’s an opportunity for more parks.
This gives banks immediate liquidity, but still punishes them for being completely asleep at the wheel. Real Americans will actually become honesty-to-goodness homeowners again and paying a mortgage they can afford. Mostly, we get the Feds out of the business of directly investing in Wall Street, which I’m not sure I’m very comfortable with.
The downside of this plan is that those property owners with more equity than debt will be penalized as the value of their homes decresses. However, those are the risks in a market economy. Not all investments are guaranteed to increase in value.
I think the Feds have massive bargining power with the banking industry.
Instead of Wall Street dictating the terms of the loan (I bet you wish you
could have done that with your mortgage!), the Feds, who have the Gold, should
set the Rule.
I believe my plan is far cheaper than $700bn. Perhaps the whole thing could be done for $350bn, which is a number, while still huge, is hardly enough to run the Iraq “War” on.
Unfortunately, there are conservative ideologs that despise the concept of the government directly helping its citizens in large numbers. Sure, it’s OK for Uncle Sam to bomb people Over There, but it’s just terrible for the Fed to improve the lives of taxpayers directly. That’s too much like socialism. Of course, the US has many elements of socialism already since capitalist, like cats, tend to get themselves stuck up a tree every so often.
Let’s not continue to reward the irresponsible behavior of the true elites of this country, Wall Street Robber Barons. The jig is up.