The instant reaction to this economic crisis was to bailout lenders. Why? The answer is because the people who run the Treasury and the Fed have worked for or with lenders for most of their careers. It never even occurred to them that it might be more beneficial to "bailout" borrowers instead.
Obviously, borrowers cannot receive a direct bailout (the "economic stimulus packages" have shown themselves to be ineffective at best). But we can receive assistance in indirect ways that would help firm up the economy.
Here's a quick list of things that could help:
- Pass the Credit Card Act of 2008
- Create more Student Loan Forgiveness programs
- Allow more flexibility in paying back student loans
- Expand existing SBA loan programs
- Create new SBA programs
- Implement a system of civil service-style testing programs for a broad range of jobs/skills to allow capable individuals demonstrate their knowledge and abilities without needing to "punch" their ticket through expensive education
First, the Credit Cart Act of 2008. This Act provides a number of common sense reforms such as:
(From the Consumer's Union site linked to below)
-- Prevent my card company from changing the rules of the game midstream. My credit card company shouldn't be allowed to arbitrarily hike my interest rate. A deal should be a deal.
-- Prevent card companies from playing games with my payments that increase the finance charges I pay. Right now, if I have balances on the same account at two different interest rates -- such as a balance transfer teaser rate and a new purchases rate -- I'm not allowed to pay off the high-interest balances first, something that's in my best interest. Instead, I am forced to incur costly interest charges on the higher rate balance until the low-interest balance is paid off. I should be able to pay off my high-cost balance first. That's just common sense.
-- Prevent credit card companies from requiring me to pay a fee just to pay my bill.
-- Ensure that I'm given an adequate amount of time to pay my bill on time by requiring my credit card company to send my bill out no later than 21 days from the due date.
--Stop the aggressive marketing of credit cards to young people who need a chance to establish themselves without a heavy burden of debt.
Consumer's Union (the Consumer's Report people) has a advocacy website designed to help you let your senators know that this legislation is important to you. Take a look and, if you do use it, make sure to personalize your message to try to at least make it only a pseudo-form letter.
Second, I and, I suspect, many others were induced into getting college degrees and even graduate degrees with the promise that all those student loans would be more that offset by the increased compensation we would receive. Here I am, $100k+ in student loan debt later, with a law degree and I'm earning less than my younger sister who attended a year or so of community college. I would jump at the opportunity to serve my community in exchange for either loan forgiveness or a significant reduction (if not elimination) of my student loan interest rates. How can I ever be expected to buy a house or even a new car when I'm paying for the equivalent of a tiny little house in my head?
Third, after being laid off from my firm due to the downturn earlier in the year, I've been forced to go into solo practice. This is fine except for the fact that there has been a significant downturn in the legal business due to the economy. As such, I'm barely making ends meet. I'm having difficulty finding new clients. And I can't in good conscience charge my existing clients much money because they simply don't have much money. Even if I did raise my rates, they simply wouldn't be able to pay and would thus either go without legal assistance that they need or else they would end up owing me money that I could never collect from them because they do not have it. Help for small businesses through increasing existing SBA programs and creating new SBA programs would not only help them, it would also help me and other professionals such as accountants, doctors, and dentists. It would also help shipping companies, suppliers, media companies that provide advertising space, technology companies, and many other businesses that provide support services to other companies. Economic uncertainty causes small businesses to spend less money which in turn harms other businesses which in turn harms other businesses. Removing some uncertainty for small businesses will start cash flowing between businesses a lot faster than pumping money into banks and praying that they'll start lending money. Even if they do start lending, who in their right mind would actually take out a loan without a reasonable belief that their business will generate enough revenue to justify them?
Finally, I've considered and looked into trying to find work in other fields in which I'm skilled (or believe myself to be skilled, anyway). Studying business and tax law in law school helped me learn a lot about economics, accounting, business management, and HR. Getting an undergraduate degree in Middle Eastern History should, in combination with my law degree, make it relatively easy to become a teacher. Yet in New York (my home state), becoming a teacher would take me two or three years and cost me tens of thousands of dollars in tuition. Further, I cannot study up on the GAAP principles and become eligible to work in accounting, despite the fact that I know more about the tax rules governing sole proprietorships, LLCs, partnerships, and corporations that most accountants I've met. A lack of HR experience disqualifies me from HR jobs even though I'm quite familiar with the ADEA (Age Discrimination in Employment Act), ERISA, and the many other federal laws that govern employment.
Why is it that I needed to take the SATs to get into college and the LSAT to get into law school and yet I cannot study for and take any tests to demonstrate my aptitude for any particular vocation without taking numerous classes on my own dime in subjects I already mostly know in order to demonstrate that I'm qualified to work in those fields? It strikes me as insanse.
I'm done ranting, I guess. I hope it was an interesting and useful rant and one with which you can sympathize. Thoughts? Comments?
(Thanks for reading)