Disclaimer: I thought of this randomly while at work earlier today. The more I thought about it, though, the more it made sense. However, I am not an investment banker, nor an economics expert, nor even a big-shot within any industry whatsoever. I'm merely a progressive dude fed up with this mess, and I appeal to the greater brains at DKos to poke holes in my ridiculous idea.
Stream of consciousness follows, I apologize. Again, feel free to gently eviscerate the points that don't make sense:
Congress wants to spend a ridiculous amount of money bailing out troubled financial institutions. They wish to do this by essentially buying all of these bad investments; bad mortgages owed by people who cannot ever pay for them. At the same time they'll also give all the people that screwed us over the last 30 years a gigantic check with which to buy more hookers and blow with.
Screw that. Instead, take the money and outright purchase all of the foreclosed properties from the banks at at most half of their appraised foreclosure value. Pool all of these foreclosed homes into a new Federal program, something like the Federal Foreclosed Homes Department or whatever. (more below)
Disclaimer: I thought of this randomly while at work earlier today. The more I thought about it, though, the more it made sense. However, I am not an investment banker, nor an economics expert, nor even a big-shot within any industry whatsoever. I'm merely a progressive dude fed up with this entire mess, and I appeal to the greater brains at DKos to poke holes in my ridiculous idea.
Stream of consciousness follows, I apologize. Again, feel free to gently eviscerate the points that don't make sense, I am sure there are many:
Congress wants to spend a ridiculous amount of money bailing out troubled financial institutions. They wish to do this by essentially buying all of these bad investments; bad mortgages owed by people who cannot ever pay for them. At the same time they'll also give all the people that screwed us over the last 30 years a gigantic check with which to buy more hookers and blow with.
Screw that. Instead, take the money and outright purchase all of the foreclosed properties from the banks at at most half of their appraised foreclosure value. Pool all of these foreclosed homes into a new Federal program, something like the Federal Foreclosed Homes Department or whatever.
Take all of these homes and put them on the market at the cost of the properties. Finance through the government with extremely low interest rate, very-long-term mortgages (prime interest rate is what, 3% or something?). So 3.1% APR and 50 years.
Buying these properties gives the banks liquid capital to fix the credit crunch. The properties can then be recycled back into the housing market to disenfranchised people who lost their homes before due to BS mortgages. The actual property ownership means the government has some sort of collateral to pay back taxpayers backing up this trillion-dollar fiasco. In 50 years time, most of the money would have fully matured through the system.
The result would be a net profit for the Feds. Neighborhoods would fill up again with stakeholders ready to move in for the long haul. Tent cities disappear. Banks get liquid capital (read: cash money) to lend out to businesses so the businesses can make payroll, people can buy cars, and the regular housing market can get going again.
And THEN, once this is all in place, line up the bastard executives and politicians who started this mess and stone them to death.
What's wrong with this plan? Are my original premises fundamentally flawed? Again, I appeal to the greater genius of the DKos hive-mind. I'd like to hear some solutions or at least why my idea is silly. After a 13 hour day, it still makes a lot of sense.