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"Rescue the economy from the bottom up" is the theme of an opinion piece in today's Washington Post by Jonathan G.S. Koppell and William N. Goetzmann:

The theory underlying the bailout plan stalled in Congress is that rescuing the finance industry will restore market stability and that the benefits will eventually trickle down to average Americans. Thus, solving the subprime mortgage crisis has morphed into a much larger challenge: reassembling the architecture of the financial markets, which seemingly requires giving the Treasury secretary nearly a trillion dollars and extraordinary latitude to pick winners and losers.

There is an easier and more politically palatable fix: Pay off all the delinquent mortgages.

Edited to reflect concerns from the comments:

Implementation could follow the example of the Home Owners' Loan Corp., which in the 1930s issued new mortgages to a quarter of American homeowners. The government could offer to

refinance all mortgages issued in the past five years with a fixed-rate, 30-year mortgage at 6 percent. No credit scores, no questions asked; just pay off the principal of the existing mortgage with a government check. If monthly payments are still too high, homeowners could reduce their indebtedness in exchange for a share of the future price appreciation of the house.

That is, the government would take an ownership interest in the house just as it would take an ownership interest in the financial institutions that would be bailed out under the Treasury's plan.

THIS is what politicians have forgotten: Wall Street is NOT the economy.

I know it's important. I know finance must flow. I know that a temporary, immediate, fix of some sort is necessary -- now.

You want to fix the American Economy? Then fix the People's Economy.

Fix the People's real mortgages, not Wall Street's fictional mortgage-backed securities.

If the government did this, all the complex derivatives based on these mortgages would be as good as U.S. Treasuries. Their fair value would jump to 100 cents on the dollar, rescuing teetering financial institutions. The credit markets would be resuscitated overnight. Foreclosures would stop.

CONGRESS: THIS is why the People revolted; We understand intutively that the failed Bailout Bill will not help Us.

Read the whole piece in the Post. THIS is the plan to adopt.

Originally posted to Jimdotz on Wed Oct 01, 2008 at 04:04 AM PDT.

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Comment Preferences

  •  Tips for The People's solution (29+ / 0-)

    We the People ordained our Government to promote our General Welfare;
    If We the People want Health Care for All, Government should provide it.

    by Jimdotz on Wed Oct 01, 2008 at 04:04:40 AM PDT

    •  If I'd have known (11+ / 0-)

      I could have bought a 5 million dollar house and defaulted on that!

      Unless the government wants to pay off all mortgages--not just delinquent ones--and buy houses for everyone who doesn't currently have a mortgage, and plan on buying future houses for everyone not born yet, and repay everyone who already paid off their mortgage...

      See where I'm going with this?

      Yes, rescue the economy from the bottom up but not this way.

      -7.25 -6.77 "A politician thinks of the next election; a statesman, of the next generation." - Eubie

      by Lovo on Wed Oct 01, 2008 at 04:15:58 AM PDT

      [ Parent ]

      •  Think of it as fraud insurance payouts (4+ / 0-)

        So many people got scammed, it killed the economy.

        It can't be helped that so many of us are morons unfit to manage our own finances.  What are you going to do, license people to have a bank account?

        We have health insurance for gluttons who eat like pigs and end up with heart disease.  This idea isn't much different.

        •  But they pay for health insurance (1+ / 0-)
          Recommended by:
          Jimdotz

          or they don't have any.

          The government could hold the delinquent mortgages, letting the mortgagees start fresh, take the payments including interest and make a little profit.

          Just flat out paying off all the delinquent mortgages would be as bad a plan as handing 700 no-strings billion to the criminals who ran the fraud to begin with.

          -7.25 -6.77 "A politician thinks of the next election; a statesman, of the next generation." - Eubie

          by Lovo on Wed Oct 01, 2008 at 04:24:43 AM PDT

          [ Parent ]

          •  Read the plan in the Post (4+ / 0-)

            Implementation could follow the example of the Home Owners' Loan Corp., which in the 1930s issued new mortgages to a quarter of American homeowners. The government could offer to refinance all mortgages issued in the past five years with a fixed-rate, 30-year mortgage at 6 percent. No credit scores, no questions asked; just pay off the principal of the existing mortgage with a government check. If monthly payments are still too high, homeowners could reduce their indebtedness in exchange for a share of the future price appreciation of the house. That is, the government would take an ownership interest in the house just as it would take an ownership interest in the financial institutions that would be bailed out under the Treasury's plan.

            We the People ordained our Government to promote our General Welfare;
            If We the People want Health Care for All, Government should provide it.

            by Jimdotz on Wed Oct 01, 2008 at 04:27:06 AM PDT

            [ Parent ]

            •  Right its not about "free houses" (4+ / 0-)

              Its about FAIR houses.

            •  The diarist didn't say (2+ / 0-)
              Recommended by:
              fritzrth, Jimdotz

              the government holds an interest in the property and didn't say all mortgages. The quote in the diary says "Pay off all the delinquent mortgages."

              If the government holds the mortgages, the homeowner makes payments, and anyone--delinquent or not--who has a mortgage on worse terms than this plan offers can take advantage, I could get behind it.

              -7.25 -6.77 "A politician thinks of the next election; a statesman, of the next generation." - Eubie

              by Lovo on Wed Oct 01, 2008 at 04:37:22 AM PDT

              [ Parent ]

            •  6% interest is below market and is not fair (0+ / 0-)

              The interest rates you cite are artifically low.  Jumbo loans in California are now 9.1%  Why should a home holder who one year ago gambled on the market always going up pay only 6%?  Apparently there a alot of little Stalins out there proposing realigning assets to suit their preferred elite group.  This is just another boomer scheme to beggar the young people.  Under your plan, renters are shut out of buying a house forever. If corrupt and greedy home holders get mortgage subsidies, then all renters get rent subsidies and below market rent paid 100% by home holders.  Sound fair?    

              •  What, you don't like competition? (1+ / 0-)
                Recommended by:
                Jimdotz

                What's to stop any other bank from coming in and offering 6% or better refi's? Oh, that's right... The fact that they gambled away all their capital on credit default swaps.

                Why should a home holder who one year ago gambled on the market always going up pay only 6%?

                Some gamblers loose. Just ask Johnny Mac.

                BTW I proposed exactly this 6% plan last Friday...

                http://www.dailykos.com/...

      •  Yup... (2+ / 0-)
        Recommended by:
        Lovo, Jimdotz

        ... the phrase moral hazard" comes to mind... though it comes to mind with the bailout as is too.

      •  I so agree with you (1+ / 0-)
        Recommended by:
        Jimdotz

        I know too many people who are struggling day to day to pay on their upside-down mortgages, and they will continue to do so for decades.  In a way, they are the lucky ones because they haven't lost their jobs or had a major financial crisis, but they are big losers in this catastrophe, too.  The houses they bought weren't McMansions, just regular three bedroom, two bath bungalows that have lost 1/3 to 1/2 their value over the last two years.

      •  I'm in agreement. (3+ / 0-)
        Recommended by:
        Jimdotz, gramofsam1, kir

        In another thread, I posited a plan where ARMs and other high-risk mortgages are converted to fixed-rate loans, and have SOME of their value paid off, so as to lower the monthly payments, and make them affordable again. I'm okay with that.

        But the plan described in this diary is as cuckoo as Paulson's.

        I'm willing to accept that many of these people didn't know any better, and were mislead by predatory lenders and real-estate professionals.

        But by the same token, they can't deflect ALL of the blame onto others. Buying a home is one of the biggest decisions you'll ever make, and there's so much easily accessible information available on the subject. People who failed to do even the most BASIC research into what they were signing, are at least partially complicit in this whole sub-prime mortgage mess.

        And I'm sorry, but I draw the line at rewarding them with a free house. There are still plenty of ways to fix this crisis that don't reward the stupid and greedy on EITHER end of the financial spectrum.

        Regards,
        Corporate Dog

        -----
        Obama: $25; Shea-Porter: $50; ACLU: $25 (monthly)
        Still pissed about FISA, but disgusted by the RNC 9/11 video.

        by Corporate Dog on Wed Oct 01, 2008 at 04:41:56 AM PDT

        [ Parent ]

        •  Read the plan. No-one would get a free house. (2+ / 0-)

          We the People ordained our Government to promote our General Welfare;
          If We the People want Health Care for All, Government should provide it.

          by Jimdotz on Wed Oct 01, 2008 at 04:47:51 AM PDT

          [ Parent ]

          •  Your original diary said otherwise. (1+ / 0-)
            Recommended by:
            Jimdotz

            What's described in your update, though, is more or less in line with what I was suggesting.

            Regards,
            Corporate Dog

            -----
            Obama: $25; Shea-Porter: $50; ACLU: $25 (monthly)
            Still pissed about FISA, but disgusted by the RNC 9/11 video.

            by Corporate Dog on Wed Oct 01, 2008 at 04:50:53 AM PDT

            [ Parent ]

            •  he gave a link to the plan (2+ / 0-)
              Recommended by:
              Jimdotz, Dar Nirron

              and doing a bailout of citizens and letting it "trickle up" is no worse than bailing out wall street and hoping it will "trickle down."

              Join us in the Grieving Room on Monday evenings to discuss mourning and loss.

              by Dem in the heart of Texas on Wed Oct 01, 2008 at 05:03:23 AM PDT

              [ Parent ]

              •  Shame on me for not reading the plan... (0+ / 0-)

                ... he linked to as closely as I should've.

                Shame on him for a diary that, initially at least, was somewhat misleading.

                And shame on you for casting my position as being in favor of the same "trickle down" nonsense that Paulson and our Congress offered. It's not.

                I'm completely in favor of a policy that starts at the bottom, and works its way up. I'm completely in favor of the linked-to plan, in fact. But there's a gulf of difference between, "Hi. Here's the help you need to fix this and make it fair." AND, "Hi, you poor, misled, innocent consumer. Show me on the rate chart where the bad man touched you. And have a free house for your troubles."

                Our government should ABSOLUTELY be in the business of levelling the playing field so that folks have a fair shot at such a thing as home-ownership, without being taken advantage of by shysters and crooks. But there has to be SOME measure of self-responsibility, there, too.

                Regards,
                Corporate Dog

                -----
                Obama: $25; Shea-Porter: $50; ACLU: $25 (monthly)
                Still pissed about FISA, but disgusted by the RNC 9/11 video.

                by Corporate Dog on Wed Oct 01, 2008 at 07:14:21 AM PDT

                [ Parent ]

                •  If you had followed the link that was there... (0+ / 0-)

                  from the beginning, it is not fair of you to say that I was misleading.

                  We the People ordained our Government to promote our General Welfare;
                  If We the People want Health Care for All, Government should provide it.

                  by Jimdotz on Wed Oct 01, 2008 at 09:18:50 AM PDT

                  [ Parent ]

      •  They aren't eliminating the mortgage..... (2+ / 0-)
        Recommended by:
        Jimdotz, Dar Nirron

        The homeowner still has to pay it all back, just not at usary interest rates.  The government then holds the underlying asset.  The mortgage amount is known-- the number may be big, but at least it is definable.  The Paulson plan has us buying paper assets with no known value and effectively wipes the debts of thousands of bankers and investors.  Why, pray tell, is that more "fair"? (and is more prone to moral hazard, imho) The basic uncertainty in the market stems from the declining housing market.  This plan would definitely stabilize that.  The Paulson plan is anyone's guess.

    •  Except the Real Problem is $60 Trillion in Swaps (3+ / 0-)
      Recommended by:
      jotter, Jimdotz, cmorrison

      IMHO there is little that can be done to protect the financial system from the consequences of the currently unraveling Credit Default Swaps estimated by the government to be around $60 Trillion.

      Today is settlement day where the banks and Wall Street must settle their accounts. It happens every quarter. Among other things everybody must set a current value on all  assets and liabilities as well as settle outstanding transactions.

      There are no loans because the banks need every cent they can get their hands on just to meet these obligations. I think the panic is because few can meet their settlement cash requirements, and current valuations show the banks and Wall Street are seriously upside down.

      That is why it was just announced, in small print, that nobody actually had to use a real valuation, they could just make shit up.

      In other words $700B is chicken feed. What they need are trillions.

  •  Exactly what I have been saying! Huzzah! n/t (1+ / 0-)
    Recommended by:
    Jimdotz

    To say my fate is not tied to your fate is like saying, "Your end of the boat is sinking."--Hugh Downs

    by Dar Nirron on Wed Oct 01, 2008 at 04:10:57 AM PDT

  •  Payoff troubled mortgages. (2+ / 0-)
    Recommended by:
    Jimdotz, political junquie

    Keep people in their homes.
    Investment properties -- take the hit but keep the property if the owner can't handle a workout.

    John McCain is an angry clown and the GOP is his circus.

    by chicago jeff on Wed Oct 01, 2008 at 04:12:47 AM PDT

  •  Is this my bailout? I've been waiting... (6+ / 0-)

    My mortgage is not delinquent, so can I get in on this act?

    Where the fuck is my bailout?

    by ThanxAl on Wed Oct 01, 2008 at 04:13:47 AM PDT

    •  Your benefit will be no Great Depression II (3+ / 0-)

      I know that's a little abstract, and not as sweet as it will be for others, but it's true.

      We the People ordained our Government to promote our General Welfare;
      If We the People want Health Care for All, Government should provide it.

      by Jimdotz on Wed Oct 01, 2008 at 04:21:25 AM PDT

      [ Parent ]

      •  I can't eat abstractions (0+ / 0-)

        So just remind me why it is better for me to bailout people who took irresponsible mortgages over Wall Street "fatcats"?

        I remember several of my friends taking out these loans encouraging me to do the same. Oh, come on, they said, you can afford it. We made the prudent decision and two of them have already lost their homes.

        So tell me again, why I am bailing them out?

        If this is the progressive plan, it will reward bad behavior. Who on earth is going to decide between homeowners who actually got ripped off and those that didn't and were simply irresponsible.

        And why should people who (a) took the time to inform themselves fully about the single largest transaction most middle/lower class people will ever make and (b) made responsible decisions, now be burdened with paying for the mortgages OF PEOPLE WHO HAVE NICER HOUSES?

        Just 'splain that to me.

        Where the fuck is my bailout?

        by ThanxAl on Wed Oct 01, 2008 at 05:14:27 AM PDT

        [ Parent ]

  •  that's too far the other way... (4+ / 0-)
    Recommended by:
    irate, Lovo, TL Eclipse, HeadnHeart

    I know of one fellow who bought a house. Nothing down. Never made a single payment on it. Borrowed additional money on the house to buy a motorcycle. Kept the motorcycle. Abandoned the house. Should he be given a free house?

    •  You don't really "know" a fellow (2+ / 0-)
      Recommended by:
      Jimdotz, political junquie

      do you?  You're just giving us an anecdote and stating it as though it were a real experience, right?

      Come on.

      •  I don't know this individual personally.. (0+ / 0-)

        but my nephew does. My nephew bought some land at auction that included a house. He sold the house and kept some land that adjoined his farm because he couldn't afford it all at the time. A few years later, he heard that the guy who bought the house was about to lose it. Thinking he could now buy it at a bargain, he asked this guy how to contact the bank holding the mortgage. The guy said he didn't know how to contact the bank. If he had ben making mortgage payments, wouldn't he know how to contact the bank holding the mortgage? My nephew also related the part about the motorcycle. I'm pretty sure that's true too.

      •  I don't know a fellow, either, (1+ / 0-)
        Recommended by:
        Jimdotz

        but the fact remains that many people lived off the equity that they kept pulling out while things were good.

        People needing assistance with a bad mortgage should have to show that they indeed HAVE a bad mortgage, and didn't just wheel/deal in the bubble.

        Join us in the Grieving Room on Monday evenings to discuss mourning and loss.

        by Dem in the heart of Texas on Wed Oct 01, 2008 at 05:05:30 AM PDT

        [ Parent ]

  •  This was my idea ... too. (3+ / 0-)

    It's what I've been saying for days.  But I think people have thought it snark.  I wasn't joking.

  •  Float this plan.,, (1+ / 0-)
    Recommended by:
    Jimdotz

    and work out a compromise with the "Paulson" plan. You know something that will satisfy no-one.

    CHRISTIAN, n. One who believes that the New Testament is a divinely inspired book admirably suited to the spiritual needs of his neighbor. A. Bierce

    by irate on Wed Oct 01, 2008 at 04:21:44 AM PDT

    •  A modest modified Paulson Plan... (1+ / 0-)
      Recommended by:
      valadon

      is probably still needed, as the article in the Post states, but THIS is the real solution to the problem.

      We the People ordained our Government to promote our General Welfare;
      If We the People want Health Care for All, Government should provide it.

      by Jimdotz on Wed Oct 01, 2008 at 04:24:31 AM PDT

      [ Parent ]

      •  I'm not tsure that will "fix the problem" (0+ / 0-)

        We will careen from one crisis to the next until our credit card is declined. Now is the time to assign the "blame", who is responsible(Certainly not the borrowers), what can be done to protect the taxpayers investment, how to pay the bill, tax cutting republicans need to admit that a rise in taxes is necessary to protect the dollar, and how to prevent this fronm happening again.

        CHRISTIAN, n. One who believes that the New Testament is a divinely inspired book admirably suited to the spiritual needs of his neighbor. A. Bierce

        by irate on Wed Oct 01, 2008 at 04:35:12 AM PDT

        [ Parent ]

      •  I think that money should be infused (2+ / 0-)
        Recommended by:
        Jimdotz, Dar Nirron

        to help homeowners with the HOLC and to help others buy homes and support affordable housing, and to repairing our infrastructure, to create jobs (energy, public works or otherwise), and a financial stimulus package to Mainstreet...a small amount could be used to stave off any problems on Wallstreet, but most of the incentive should go to the people who produce in this economy.

        I support Barack America and his trusted sidekick Joe Delaware! -Socratic

        by valadon on Wed Oct 01, 2008 at 04:39:32 AM PDT

        [ Parent ]

    •  Compromise: (1+ / 0-)
      Recommended by:
      Dar Nirron

      Bottom up rescue, but no indictment for Paulson and his crooked cronies.

  •  Too bloody obvious (2+ / 0-)
    Recommended by:
    Jimdotz, Dar Nirron

    The DC pols could never manage to wrap their minds around something this straightforward...

    ___
    To achieve the impossible, it is precisely the unthinkable that must be thought.
    ~Tom Robbins

    Conlige suspectos semper habitos

    by Marcus Junius Brutus on Wed Oct 01, 2008 at 04:22:06 AM PDT

  •  Tom Friedman today... (1+ / 0-)
    Recommended by:
    Jimdotz

    notes, "This is a credit crisis. It’s all about confidence. What you can’t see is how bank A will no longer lend to good company B or mortgage company C. Because no one is sure the other guy’s assets and collateral are worth anything, which is why the government needs to come in and put a floor under them. Otherwise, the system will be choked of credit, like a body being choked of oxygen and turning blue.

    Well, you say, “I don’t own any stocks — let those greedy monsters on Wall Street suffer.” You may not own any stocks, but your pension fund owned some Lehman Brothers commercial paper and your regional bank held subprime mortgage bonds, which is why you were able refinance your house two years ago. And your local airport was insured by A.I.G., and your local municipality sold municipal bonds on Wall Street to finance your street’s new sewer system, and your local car company depended on the credit markets to finance your auto loan — and now that the credit market has dried up, Wachovia bank went bust and your neighbor lost her secretarial job there.

    We’re all connected. As others have pointed out, you can’t save Main Street and punish Wall Street anymore than you can be in a rowboat with someone you hate and think that the leak in the bottom of the boat at his end is not going to sink you, too. The world really is flat. We’re all connected. “Decoupling” is pure fantasy."

    I totally understand the resentment against Wall Street titans bringing home $60 million bonuses. But when the credit system is imperiled, as it is now, you have to focus on saving the system, even if it means bailing out people who don’t deserve it. Otherwise, you’re saying: I’m going to hold my breath until that Wall Street fat cat turns blue. But he’s not going to turn blue; you are, or we all are. We have to get this right"

    •  we want a better rebalance (1+ / 0-)
      Recommended by:
      Jimdotz

      take care of the people first this time.

      Easy for Friedman to talk about all this connectivity when corporatists are always excused their debts, and people are suffering with no jobs or health insurance.

      I support Barack America and his trusted sidekick Joe Delaware! -Socratic

      by valadon on Wed Oct 01, 2008 at 04:44:12 AM PDT

      [ Parent ]

  •  Don't think we should pay off houses (2+ / 0-)
    Recommended by:
    Jimdotz, bekosiluvu

    But another version would be to simply "help" in terms of renegotiating SOME mortgages and/or providing some funding to help people catch up on payments.

    Or how about a regulation that ties ALL APRs to the prime? No mortgage can be higher than 3 points above prime, at least for the next few years. So, if you, like many people, just got your mortgage "adjusted" upwards of 2 points to 7, it will have to be readjusted back down to 5.

    But paying off these mortgages or buying the properties outright will have other, unintended consequences....such as keeping home prices artificially inflated. That bubble has burst and good riddance. People who make under $100K a year should be able to buy reasonably nice homes with mortgages that take up no more than 1/4 of their gross income.

    What any plan of this sort should NOT do is bail out real estate speculators or folks who somehow got ridiculous mortgages ($250,000 for someone making $40K, let's say.)

    •  It sounds like you agree with the plan. (0+ / 0-)

      We the People ordained our Government to promote our General Welfare;
      If We the People want Health Care for All, Government should provide it.

      by Jimdotz on Wed Oct 01, 2008 at 04:50:26 AM PDT

      [ Parent ]

    •  Absolutely. Great ideas. And... (0+ / 0-)

      If you restructure a 250K mortgage on a reasonable 30-year fixed rate, that person making $40K would be able to swing it.

      If the FHA buys the mortgage, we the people will probably make a profit or at least break even on the investment in the long run, while the banks who are desperate for cash get that shot in the arm they need right now.  

      It might keep home prices artificially inflated (though they're going down anyway) but those prices will not explode over the 30 year term of these renegotiated mortgage.  It'll probably stabilize prices if anything.  

  •  when u get the time... video (0+ / 0-)

    42  minutes of informed history of money..
    I highly recommend it.


    you can not pay what does not exist.
    who is really holding the bag ???
    they do.

    Real News Daily http://www.antiwar.com - http://cursor.org !

    by egyinny on Wed Oct 01, 2008 at 04:39:24 AM PDT

  •  similar proposal by bruce marks on democracy now (2+ / 0-)
    Recommended by:
    valadon, Jimdotz

    yesterday in conversation with robert johnson, former economist for the senate banking committee. interesting. thanks for posting.  

  •  Ok there seems to be a disconnect (3+ / 0-)
    Recommended by:
    Jimdotz, tony26, kir

    Most here don't want to reward Wall Street for bad behavior I get that and agree.
    Now, with this plan you want reward home owners for bad behavior. And before you jump down my throat. Let's be sure we understand each other. Yes some home owners are in trouble because they were misled about the mortgages they were getting into. However very large number of borrowers were fully aware that they were over extending and did it anyway, betting that the housing market had no top and they could just refinance. Like we shouldn't reward Wall Street for stupidity I don't think we should reward home owners for the same thing.

    Next the largest percentage of bad mortgages are not in single family homes, But rather in commercial property, speculative new housing, and folks who bought multiple houses in the hope of flipping.

    From theOhio State Mortgage Study

    The study estimates that losses on first mortgages for owner-occupied homes may range as high as $180 billion.

    While that's a large amount, it is not catastrophic, said Randall Olsen, co-author of the study, professor of economics, and director of the Center for Human Resource Research at Ohio State University.

    Instead, the results suggest that the biggest losses in the mortgage crisis are not for owner-occupied homes, but for commercial real estate loans, and loans for houses bought as investments or built on speculation, Olsen said.

    In the choice between changing ones mind and proving there's no need to do so, most people get busy on the proof.

    by jsfox on Wed Oct 01, 2008 at 04:48:10 AM PDT

    •  What I really want is to save the real economy. (2+ / 0-)
      Recommended by:
      valadon, WineRev

      Mostly by remaking mortgages so that they are affordable. The details of this plan explain how that can be done.

      We the People ordained our Government to promote our General Welfare;
      If We the People want Health Care for All, Government should provide it.

      by Jimdotz on Wed Oct 01, 2008 at 04:52:10 AM PDT

      [ Parent ]

      •  Kudos to the Real Economy (1+ / 0-)
        Recommended by:
        Jimdotz

        and its salvation.

        In connection with this and other plans the point is fairly raised,

        Why should people who took out prudent mortgages and are current on them as taxpayers be compelled to bailout both people who imprudently took on a big ARM that has now adjusted out of sight? And/or bailout the bankers who pushed the no-doc, no-money-down liar loans? If we bail them out, where is the moral hazard?

        Might I suggest, Jimdotz, as an adjunct to this that homeowners who accept a government re-write of their mortgage (giving up a piece of equity, etc.) also have X number of points deducted from their credit scores for a period of, say, 5 years?

        Would this impose a medium-term penalty while still offering short-term help and "reward" the careful and the prudent?

        Just an idea.

        Shalom.

        "God has given wine to gladden the hearts of people." Psalm 104:15

        by WineRev on Wed Oct 01, 2008 at 05:06:37 AM PDT

        [ Parent ]

  •  Exactly...as this bill gets more and (2+ / 0-)
    Recommended by:
    Jimdotz, Dar Nirron

    more convoluted, now with tax cuts, the more and more it is becoming obvious that this is to protect the wealthiest and those who raped and pillaged the markets through the sub-prime loan profiteering!  It's disgusting.

    "People are only as happy as they make up their minds to be" Abraham Lincoln

    by carolh11 on Wed Oct 01, 2008 at 04:52:13 AM PDT

  •  I agree. Any plan should (2+ / 0-)
    Recommended by:
    Jimdotz, Dar Nirron

    address the delinquent/failed mortgages and provide a way for folks to renegotiate  or buy and hold till the property can be sold. Any thing else, I'm not too cool on.

    Whatever the Repuglicans say, the truth is the opposite.

    by MariaWr on Wed Oct 01, 2008 at 04:54:05 AM PDT

  •  just a side note (2+ / 0-)
    Recommended by:
    rosabw, Jimdotz

    but last week Congress tried to pass a $60 billion stimulus package to help with some of these various needs we've mentioned for the people(only 60 billion mind you), and bush vetoed the bill.

    So anyone who thinks that we should help Wall Street and then we'll be taken care of is smoking some crazy stuff. They won't help us unless we make them take care of the people first.

    BTW minimum wage should be raised 10-14/hr.

    I support Barack America and his trusted sidekick Joe Delaware! -Socratic

    by valadon on Wed Oct 01, 2008 at 05:01:32 AM PDT

  •  on dem. now bruce marks argued stop foreclosures, (1+ / 0-)
    Recommended by:
    Jimdotz

    restructure the bad mortgages, no new interest rate increases and then see how the market responds. but no bailout.  

    robert johnson argued for a bailout for mortagage relief with an idea similar to the post article, strict taxpayer protections, and "restructuring wall street" which there wasn't time to elaborate. . . .  

  •  WaPo said that? Wow. And another thing... (4+ / 0-)
    Recommended by:
    rosabw, Jimdotz, Dar Nirron, annominous

    If the big concern is small business liquidity for operating expenses, then why doesn't the money go straight to the SBA?

    If the big concern is mortgage foreclosures then why doesn't the money go straight to the FHA?

    Bail-out to Wall Street Gazillionaires is supposed to help MORE?  So they can skim and let NOTHING go to the people who really need it?

    The people who REALLY keep the economy going are the ones who maintain the job and housing stability.  

  •  The clarification makes sense. (1+ / 0-)
    Recommended by:
    Jimdotz

    Before the Edit, I was starting to sound like a Republican:  I'm struggling to pay my bills and someone else gets their mortgage paid off.  

    A refinance to a stable rate, with partial government ownership of overvalued property.  This is an interesting solution.  

    •  I agree. I should have presented the plan... (1+ / 0-)
      Recommended by:
      bekosiluvu

      a little differently at first. I was just so excited by it that I forgot to present enough of it to someone reading it for the first time.

      We the People ordained our Government to promote our General Welfare;
      If We the People want Health Care for All, Government should provide it.

      by Jimdotz on Wed Oct 01, 2008 at 05:40:52 AM PDT

      [ Parent ]

      •  When is someone, anyone going to address... (0+ / 0-)

        our criminal taxation rate?

        Yes, I am hopelessly naive to think that legislators will utter the words weeks before an election.

        I don't care. It is the trickle up economy that is the foundation on which this mess is laid. Until we address the fact that families who make $351,000 per year pay the same tax rate (35 percent) as those who make billions, all of this is window dressing.

        The U.S. is among a handful of nations, Hong Kong, Gibraltar, Saudi Arabia and Egypt, without VAT. What do we have in common with those countries?

        Without the balloon of cash floating in the stratosphere ending up in the hands of investment bankers, any credit malfeasance would have been much harder to hide for so long.

        I've always wanted to be somebody, but I see now I should have been more specific. -- Lily Tomlin

        by leolabeth on Wed Oct 01, 2008 at 05:50:14 AM PDT

        [ Parent ]

  •  Lets remember the key problem (2+ / 0-)
    Recommended by:
    Jimdotz, bekosiluvu

    I think people need to realize that this 700 billion is just a temporary fix for atleast 6 months. The problem is that too many people can't afford their mortgages and their mortgage is worth more than their house. Top economists have said atleast 1 million homeowners will file for foreclosure in the next 6 months. Neither Paulson or the Dodd bill will help those people. So what happens in 6 months when 1 million homeowners can't afford their mortgages and the banks lose all that equity? What happens when Bank of America who just bought CountryWide goes under because too many people stopped making their payments? Bank of America will go to Wall Street and ask for another multi-billion dollar bailout from the taxpayers. Look we were told we had to bail out Freddie, Fannie and AIG to prevent the economy from collapsing. Did it work? Yes, but only for a few months. This bailout will only help for a few months too. What everyone needs to do is come up with a more permanent long term strategy to prevent the economy from collapsing. And yes, I know alot of people don't want to help the homeowners but if 1 million people file for foreclosure then the banks are screwed too and it will affect your 401k and stock prices. Also, if you live in an area with alot of foreclosures then your house price will go down along with it. If Obama had guts, he would come up with a permanent solution to this mess. Unfortunately, he is taking the temporary fix approach. Still wonder why Obama refused to let the bankruptcy provision into the Dodd bill as that would atleast be a long term strategy? I don't expect McCain to make reasonable fixes to the economy but I did expect it from Obama.

    •  taking over the upside-downs with a 30-year fixed (0+ / 0-)

      Will vastly ameliorate the situation.  

      It will give these properties the time they'll need to recover their value (30 years), it leaches out the toxic waste from the securities portfolios, and -- most importantly -- it keeps people in their homes.  

      Plus it's not a "bail-out" its just a debt restructuring.

      The FHA gets a lower and less risky return over time, while the banks get a shot in the arm.  Not a bailout but relief from the worse of their problems.  

  •  The real housing issue. (1+ / 0-)
    Recommended by:
    Jimdotz

    The real housing issue seems to be those who had mortgages in those markets where homes values were hyper inflated. They bought at the edge of their ability to repay. Then gas food and utilities spiked in price and house values in some areas dropped by half.

    So now your really struggling to pay that mortgage on a house they know they owe twice what it is worth. It is understandable why someone might want to walk away from such a deal or eventually just can't pay it.

    This proposed plan deals with this segment of the housing problem. Shoring up even 25% of the mortgages could have a significant effect on the financial markets. We start having some "knowns" going on related to those diluted mortgage based financial products.

    The bottom line is the solution to this lies with the FHA and the SBA dealing directly with home owners and main street. The people don't have time to gamble on wall street maybe solving their mess and it trickling down

  •  Combine this and DiFazio's plan (1+ / 0-)
    Recommended by:
    Jimdotz

    Combine this plan with the DiFazio plan in the house that deals mainly with changing some of the Wall Street rules causing the valuation and other problems and you have a pretty darn good deal.

    None of this dumps good money after bad at these investment banks.

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