I don’t know, maybe I haven’t learned anything in
all my years. But having run three businesses in my lifetime, and been through some hard financial times myself, it seems to me that there has to be a better way of averting this “financial calamity” that the government is warning about.
We all know what is going to happen to that 700 Billion.
It’s going to go to those banks/brokerage houses, and go right down the tubes, with absolutely no help for the individuals who really need it.
I was discussing this with my daughter (extremely intelligent) last night, and she hit on what seems to be a pretty good plan for the salvation of the “deserving” rather then the “bloodsuckers”.
Rather than taking over all these high-interest mortgages that these unscrupulous organizations knowingly forced on buyers,
why not try something a bit more sensible? The government would save half of the 700 Billion, the homeowners would be protected from foreclosure, and the so-called “bank/brokerage house companies, have a chance of remaining solvent. Not that they deserve it by any means, but only because killing them
off might provoke a financial panic.
Say a homeowner got horn-swaggled into a 10.75% 30-year fixed rate mortgage, and now can’t make the payments. If the bank forecloses, it is stuck with a physical asset, that is falling in value each day. When they write it off, or sell it for next to nothing, they lose a fortune. Rather than put greed before the
welfare of the country, what if the government offered to do this?
Force all mortgage holders to roll back interest rates on all mortgages, effective immediately, to 5.25%. The banks benefit by not having to
write off all these assets, while still making fair profit on the lower rate mortgages, and the homeowners get to keep their homes with affordable payments.
Then, the government can guarantee the homeowner mortgages to the banks. Even assuming that half the homeowners will default, which is absurd, we would be stuck with a 350 Billion Dollar bill, rather than 700Billion.
And the best part is that none of this money winds up in the hands of the charlatans and crooks who are so adept at mismanaging finances. They would only waste it on incompetent fools who look for huge “performance bonuses” for doing inferior jobs.