My Two Cents - No BAILOUT for the RICH

The $700 Billion Government Bailout – NO WAY!
In looking for solutions, the government must put the people first. Mortgage lenders, investment bankers and the brokerage community who require that their “profits be privatized” but now want to “socialize their risk” can’t have it both ways. They got us into this crisis by not asking whether the people they lent money to could repay. Now those who borrowed are facing the loss of their homes as market conditions have changed. Yes, the consumer has to take some blame in this crisis as do the realtors, but those who lent the money had the primary responsibility – can you repay the loan? Banks benefited from reselling the homeowner’s promise to pay to the investment bankers and brokerages houses, creating billions in profits.

Now the value of many of these homes has dropped beyond what the home buyer owes. What happens when the home buyers loses their houses? The banks end up with unoccupied houses and a mortgage that won’t be repaid – a lose lose for everyone. Let’s go back to basics.

Rather than a bail out of the investment bankers and brokerage houses, let’s protect the people and reset the economy based on the true market value of these properties, as they stand today. Congress should provide 5% fixed-rate 30 year loans for those “owner-occupied” homes, using today’s market value; therefore permitting people to stay in their homes and pay off their new loans. To help the banks, people could secure these new loans through the original lender they used to obtain their mortgage. There by, providing lenders with revenue, income from fees and other services which will help re-stabilize the banking and mortgage industry. If the house is worth less than the previous outstanding debt, let the private sector deduct the difference from their taxes. This will be far cheaper than the $700 billion blank check currently being considered. If the home owner defaults under the current $700 billion bail out scenario, the banks end up with homes they can’t unload, loans that will not be repaid, and our economy suffers even more.

By assisting taxpaying homeowners, the markets are stabilized and the banks make money. Moreover, the people who demand that their “profits remain privatized” and who now want their “debt socialized” will pay for the mistakes they made in their rush for a quick buck. Under the strategy of helping homeowners first, the mortgage holder benefits by receiving payments on properties which otherwise would be in foreclosure, we don’t end up with a ton of foreclosed homes in the marketplace and there’s no blank check to those who don’t deserve our trust. Yes, Congress must bail out the people, not the investment bankers and brokerage houses. It’s time for them to do the right thing for the people of this country.