I think Mr. Mallory Factor has got something here. This is a man who knows his stuff but, from reading the articale you all can tell that. There needs to be a place for him in the John McCains advisory commity it would keep the white house rep.

Foreclosures are destroying property values on Main Street.

Foreclosures are destroying balance sheets on Wall Street.

Stop foreclosures and you fix the problem.

1. Allow participating companies, and bankruptcy judges to reduce mortgage loan balances in order to keep homeowners in their homes – and stop foreclosures.
2. This will immediately begin to normalize property values on Wall Street.
3. This will convert non-performing loans into performing loans – and immediately begin to restore balance sheets on Wall Street.

This simplified solution resolves the root problem - foreclosures - for far less than the $700 billion shamelessly requested by Wall Street (Paulson) for Wall Street.

Wall Street should be punished - not allowed to dictate terms to America, and the Congress.

Afterall, it was Wall Street that engineered this failure.

Better yet, let those who are losing their homes due to foreclosure, repurchase their home at TODAY’s value and 6% interest. Let the lenders swallow the loss in value between the original loan and the new repurchase loan. No closing costs,etc. The down payment being what they’ve paid on the original loan so far. No relief for second home mortgages. One home is all we NEED. 6% has usually thru the years been a fair interest rate for a home loan and it encourages the lenders about recouping their losses (brought on by to their own stupidity and greed).

[...] similar thought is posted by James P. Pinkerton in Let’s Bail Out Main Street NOT Wall Street. Here’s How.  Pinkerton describes a plan [...]

“Let’s Bail Out Main Street NOT Wall Street. Here’s How
Who should we bail out: Wall Street? Or Main Street? According to today’s reports, Washington has made its choice clear—Wall Street will get the bailout. The White House and Congress, Republicans and Democrats, seem to agree: Help Goldman Sachs, not Joe Sixpack. But there are alternatives, if the people will order their “leaders” to pay attention to them, instead of the lobbyists and bankers who are currently calling the shots.
The emerging bipartisan consensus—the original bailout, plus a few new provisions concerning oversight—is the epitome of “trickle down.” Wall Street made bad decisions, but Wall Street is too big to fail, so we must give them $700 billion, so that the rest of us can avoid a recession. Got that? The Wall Street message is, “We screwed up, so give us money, otherwise, you’ll be sorry.”
Amazingly, that argument—top-down piracy at its most naked—is carrying the day in Washington. If one ever needed proof that the government is the tool of the ruling class, this is Exhibit A.
So what’s the alternative? Mallory Factor, a South Carolina businessman, has a better idea: “Bail out homeowners, not lenders,” he says. “Any qualified buyer who wants to buy a house,” he says, “could buy one at a guaranteed low interest rate, of, say, 3.5 percent. And any qualified homeowner who wants to refinance could get the same rate.” If that happens, Factor predicts, “There would be a flood of liquidity into the system, as people bought houses again, which would also help reduce the housing-stock overhang. In addition, as people refinanced, all these instruments, such as collateralized mortgage obligations, which Fannie Mae and Freddie Mac have choked on, would once again start performing. And that would save the banks and many investors. It would save the banks and investors by saving homeowners and homeownership.” In other words, trickle up, not trickle down.
The current interest rate for a standard 30-year mortgage is around 6 percent. At that rate, the payments on a $300,000 mortgage work out to $1,799.65 a month. By contrast, at Factor’s proposed rate 3.5 percent, the payment would be just $1,347.13 a month. That’s a whopping difference, especially for homeowners who might have paid more for a house than it is currently worth. And at 8 percent, which many adjustable rate mortgages (ARMs) have shot up to, the monthly bill is a prohibitive $2,201.29 a month.
This interest-rate buy-down is the elegant heart of Factor’s plan. And who would do the buying down? “The federal government,” Factor answers bluntly. “This is a government buy-down of interest rates, but it would benefit homeowners first, and only then, second, the banks.” But, he notes, the buy-down is only for qualified borrowers. So the banks would still lose a lot of money. Which is good, since they need to be reminded not to make this mistake again. And since there’s no Fannie or Freddie any more to buy these dubious loans in the future, the banks will have to be careful, once again, about who is a qualified borrower, and who is not. The government, Factor reminds us, would only be on the hook for the costs above 3.5 percent—the banks would be responsible for the first 3.5 percent, and for the principal.
That’s bad news for bankers, Factor adds, but good news for taxpayers: He estimates that his interest-rate buy-down plan would cost Uncle Sam perhaps $200 billion (more if interest rates rose, less if interest rates fell). But it would surely be cheaper, he suggests than the trillion or more that the Washington plan seems destined to cost. And once again, Factor’s plan would focus on Main Street, not Wall Street—surely a substantial virtue in and of itself.
“The Washington plan,” Factor observes, “is like the government going to a bunch of car dealers, and saying, ‘You’ve got a bunch of cars in your warehouse that nobody wants to buy, because most of them are lemons. How did this happen? Because you didn’t bother to kick the tires or otherwise examine them before you ought them from the factory. But because we’re the government, [aka] Uncle Sugar, we will buy them off you, deliberately overpaying, big, so that you can take our cash and get back in the car-retail business.’”
And yet there’s an obvious “moral hazard” in that arrangement: How do we know that these myopic car dealers will do a better job tire-kicking the next time? Washington’s answer is “more regulation,” but that regulation generally just creates another layer of bureaucracy, as opposed to genuine protection. Factor’s approach is much simpler: Under his plan, banks will get a bunch of new mortgage applicants all seeking the government-subsidized rate of 3.5 percent; then the banks, for their own protection, will have to figure out who will be able to pay back their loans.
Of course, if the rate were a guaranteed 3.5 percent, plenty of homeowners would rush to refinance their existing higher-rate mortgages. That’s fine with Factor: “That would create the liquidity that banks need.”
Factor freely concedes that his solution is not perfect: “There are no really good answers to this disaster,” he allows. “There are just less-bad answers, that minimize the cost to the taxpayers, and that teach the banks and Wall Street a harsh but useful lesson in market economics.”
And of course, to the rest of us, weary of being ripped off by Wall Street shysters who are using Washington to rip us off a second time, the Factor Plan sounds like a pretty good deal.”

By James P. Pinkerton

What a stupid idea. This sounds like amateur hour or arm-chair economist. “Hey, I’ve got an idea, let’s inflate our way out of the bubble. Awesome idea, dude! I knew we’d find a way to dig ourselves out of this hole!” Bet Palin would back it though.

Great idea. Even better, loan us the money at 2%. I’m qualified and I’d refi in a second. Even better yet have the Feds buy all the “good” mortgages and only charge us 2%. That would put money in the banks, and “Bailout Main Street”.

The Feds also need to fess up that they helped with this mess by deregulation and by putting pressure on banks to loan to high risk borrowers. Print us a list of politician who voted for the legislation that helped cause this mess before this election and see if any of them are re-elected!

I think Mr. Andy Krzystofczyk needs to check his math, you might have missed a few decimals. 85 billion divided by 200 million is a meager $425/person. Probably won’t move the economy much.

So, your alternative plan is basically to create another housing bubble? Stay out of economics.

Yuck…bad plan. That would mean all of the mortgage companies go belly up and an entire sector (as struggling as it is) goes away with tons of workers now looking for a new career. Small businesses that rely on this industry also goes away. To top it off, now the idiot government workers (yes and they are idiots…just go to your local DMV) now control the money and mortgages. Double Yuck.

Here’s a plan. Abolish the IRS and go to the FairTax. The industry that relies on it now turns their attention on helping people get their rebates back rather than doling out more and more money. The 7 trillion dollars that goes untaxed is now taxed! Americans take more home and it provides instant capital to the economy. Oh wait…this must be a bad plan because it takes the power away from the government. Silly me, what was I thinking!

Are we to believe that a failed congress, a failed wall street and failed president would be able to put together a fiscally responsible package to correct failed fiscal policies in just 10 days? Give me a break. America has been living beyond its means for far to long now and today is as good a day as any to change that. Maybe people will not be able to buy a new car, home or toy because hey, they cannot actually aford it. What a novel idea. Maybe banks are not loaning money to each other because they’ve been cooking their books for to long now. Banks do not know which of their associates are actually solvent. Wonder Why? Does anyone remember Enron, MCI Worldcom and Tyco…now we have Fannie, Freddie and AIG. Is it any wonder the American people do not believe Wall Street because once again they were cooking their books too. I say WAKE UP capitol hill and wall street the American people are ready to take our country back.

This is a beautiful plan. Please make sure more people hear about it through Fox. Let questions be asked on the morning F&F show and I want to hear Neil Cavuto’s opinion on it. This would be a great foundation to cleanse us from the greed we’ve all been part of because of the excessive use of credit and our desire to have bigger and better homes, cars, vacations and even places of worship. This is a real wake-up call for America. There really is no free lunch, someone has to pay.

Sounds good to me probably too practical for many in the beltway

[...] to the government buying up nation’s bad mortgage investments. From James Pinkerton, Let’s Bail Out Main Street NOT Wall Street. Here’s How: Mallory Factor, a South Carolina businessman, has a better idea: “Bail out homeowners, not [...]

This plan is welfare none the less. This plan would cost the Government (that is the taxpayers) over $5000 per year per mortgage for the life of the mortgage. That’s much more expensive than the Bailout plan. I’m no fan of the bailout plan, but your plan sounds like more of the same.

Now im not a washington insider as many of you are not also. Im not a banker as many of you are not. I dont have an economics major that I can boast about. Im just a worker bee like most. What I do have is: reason and conviction.

What we all need to do is sit back and think about this logically. Forget all the old laws. Forget what he said she said or he did or she did stuff. We are here and its only here and onward.

Logic #1- Banks are failing by no means of the average working class. Is it then logical for the average working class to give the banks money based on wall street rhetoric?

Logic #2- People are crying that there house might be forclosed on. Is it logical that they should have been in a house in the first place? I mean whats wrong with someone having an apartment anyways? Lets face it its only logical that if they are having problems with their home then it can be said that their credit is mostly screwed up anyways!!!

Logic #4- Would anyone in these forums buy up some bad debt? I mean that is incomprehensible. Thats like telling you that you have to buy this car for 10,000 and its only worth 2,000 with the hopes that maybe it will be a collectors item and regain the money back. The problem is that you have no choice in the matter and you will buy it. Anyone in the right mind would say HELL NO!!!! Is it then logical to buy bad investments? absolutly not. Just logic

Logic #5 The banks and wall street are telling us that if this doesn’t go through that the sky will fall? Is that even logical to think the sky is really going to fall???

I like Mr. Birkenmeier’s plan…
I’m against the $85,000,000,000.00 bailout of AIG.

Instead, I’m in favor of giving $85,000,000,000 to America in
a We Deserve It Dividend.

To make the math simple, let’s assume there are 200,000,000
bonafide U.S. Citizens 18+.

Our population is about 301,000,000 +/- counting every man, woman
and child. So 200,000,000 might be a fair stab at adults 18 and up..

So divide 200 million adults 18+ into $85 billon that equals $425,000.00.

My plan is to give $425,000 to every person 18+ as a
We Deserve It Dividend.

Of course, it would NOT be tax free.
So let’s assume a tax rate of 30%.

Every individual 18+ has to pay $127,500.00 in taxes.
That sends $25,500,000,000 right back to Uncle Sam.

But it means that every adult 18+ has $297,500.00 in their pocket.
A husband and wife has $595,000.00.

What would you do with $297,500.00 to $595,000.00 in your family?
Pay off your mortgage – housing crisis solved.
Repay college loans – what a great boost to new grads
Put away money for college – it’ll be there
Save in a bank – create money to loan to entrepreneurs.
Buy a new car – create jobs
Invest in the market – capital drives growth
Pay for your parent’s medical insurance – health care improves
Enable Deadbeat Dads to come clean – or else

Remember this is for every adult U S Citizen 18+ including the folks
who lost their jobs at Lehman Brothers and every other company
that is cutting back. And of course, for those serving in our Armed Forces.

If we’re going to re-distribute wealth let’s really do it…instead of trickling out
a puny $1000.00 ( “vote buy” ) economic incentive that is being proposed by one of our candidates for President.

If we’re going to do an $85 billion bailout, let’s bail out every adult U S Citizen 18+!

As for AIG – liquidate it.
Sell off its parts.
Let American General go back to being American General.
Sell off the real estate.
Let the private sector bargain hunters cut it up and clean it up.

Here’s my rationale. We deserve it and AIG doesn’t.

Sure it’s a crazy idea that can “never work.”

But can you imagine the Coast-To-Coast Block Party!

How do you spell Economic Boom?

I trust my fellow adult Americans to know how to use the $85 Billion
We Deserve It Dividend more than I do the geniuses at AIG or in Washington DC .

And remember, The Birk plan only really costs $59.5 Billion because $25.5 Billion is returned
instantly in taxes to Uncle Sam.

Ahhh…I feel so much better getting that off my chest.

Kindest personal regards,

Birk

T. J. Birkenmeier, A Creative Guy & Citizen of the Republic

Mallory Factor is not some suddenly enlightened john doe businessman. who is he?

“Mallory Factor is Chairman of the Free Enterprise Fund (”FEF”). Mallory Factor has been a major fundraiser for Bush and Republican Senate candidates.”

So let’s take into account that Mallory was a “major” reason for the election of the president who was behind the proposed $700billion bail-out in the first place. Thanks Mallory

at least do us the very basic journalist duty of identifying your source. this type of sleight of hand journalism is on a par with the sleight of hand finances that got the country into these problems in the first place.

I absolutely agree with this proposal!…Now, how do we get the lunkheads in WA to consider it?

Thank you!
Finally someone is sounding off some common sense!

IS MAIN STREET FEELING A CREDIT FREEZE?
There’s only one way to find out the truth. Main Street SPEAK UP. If you are in the business of real estate, local or small business financing, a small business who regularly gets financing, a local bank officer or any of a number of professionals who knows what’s REALLY HAPPENING ON MAIN STREET - let’s hear from you. Is Main Street feeling a credit “freeze?”
http://mainstreetspeaks.blogspot.com/

This is the best plan yet. Push it up the ranks. We need this to be proposed. Nobody wants to bailout these banks. Put the money into the american people who can actually afford it and we will fix this diaster, not bankers earining 20mil a year. They are out of touch.

That sounds good on paper but then again so does communism, and the free market. the problem is that your over simplifying a very complex thing. yes you need to bail out homeowners, but that is nat going to solve everthing. YOU NEED TO THINK CRITICALLY AND TAKE EVERTHING INTO CONSIDERATION. MAKING GENERALIZATIONS AND NOT THINKING THINGS THROUGH IS WHAT GOT US HERE IN THE FIRST PLACE.

I love this plan!!! How can we push it? No to Wall St pirates!!!

I agree with Bob- it is so disheartening that irresponsible people get bailed out- when those of us who live within our means are being asked to pick up the tab. NO! Talk about turning America into a socialist state! NO, NO, NO!!!! on the bailout.

Have any of you ever stopped to think that all of the foreclosures going on was just not brought on by banks giving mortgages to those who knew they couldn’t afford them?? I am here to tell you this is simply not the case…so stop pointing the finger at what you do not obviously know.

Have you ever stopped to think that maybe, just maybe, a lot of the said foreclosures are happening because of JOB LOSS in the families that are losing their homes, or adjustable rate mortgages that the banks are greedy on when it comes to raising those rates above, and beyond what the mortgage holder can NOW AFFORD?? I mean, it is possible that the person, or family that bought their homes COULD afford it when they were given this mortgage to begin with, but circumstances in their lives have changed dramatically like JOB LOSS, Higher fuel prices for everyone at the pump, not to mention higher costs for goods, and FOOD. Just think about all of this before you point a finger, and blame just the homeowners for buying a hose they knew they couldn’t afford.

It is greed from the banks that helped get us into this mess, greed from our own Governmant, and huge greed in Wall Street squandering money away that was never thiers to begin with. I don’t know about any of you but I am vehemently oppossed to any “Bail Out” for the crooks that got us into this mess in the first place. I don’t know about any one else here, but when I leave a company I do not, nor have I ever, recieved a Golden Parachute payment into the millions of dollars…if that were the case for many of us, we would not be struggling out here now.

Nope…our elected officials in Washington need to apply the same laws to failed banks, and Wall Street that they do to any business owner who cooks their books, takes ungodly ridiculous bonuses, and payments, and then has to close down. In my teaching you do not reward them, you let them fall flat on their duff. I am so done in being duped by my own Government and BIG BANKING, AND BUSINESS out here in the real world. Not my bill, and I don’t want it!!!

[...] than linking to the Fox Forums article by James Pinkerton that contains Factor’s plan, I’ll just post it here. Who should we bail out: Wall [...]

I believe Hillary Clinton laid out a similar plan for the housing crisis in last weeks Wall Street Journal.
This type of resolution makes much more sense then just giving a blank check for $700 billion to the very people who caused this mess. Wake up America…

It’s a good, yes better plan, even though the characterization of the current “bailout” badly distorts reality.
What would also be necessary in the better plan would be for the low interest to only be available to homes built in 2008 or earlier. Otherwise you would invite homebuilders to add more to the current oversupply problem.

A banking system in crisis after the collapse of a housing bubble. An economy hemorrhaging jobs. A market-oriented government struggling to stem the panic. Sound familiar?
It does to Sweden. The country was so far in the hole in 1992 — after years of imprudent regulation, short-sighted economic policy and the end of its property boom — that its banking system was, for all practical purposes, insolvent.
But Sweden took a different course than the one now being proposed by the United States Treasury. And Swedish officials say there are lessons from their own nightmare that Washington may be missing.
Sweden did not just bail out its financial institutions by having the government take over the bad debts. It extracted pounds of flesh from bank shareholders before writing checks. Banks had to write down losses and issue warrants to the government.
That strategy held banks responsible and turned the government into an owner. When distressed assets were sold, the profits flowed to taxpayers, and the government was able to recoup more money later by selling its shares in the companies as well.
“If I go into a bank,” said Bo Lundgren, who was Sweden’s deputy minister of finance at the time, “I’d rather get equity so that there is some upside for the taxpayer.”
Sweden spent 4 percent of its gross domestic product, or 65 billion kronor, the equivalent of $11.7 billion at the time, or $18.3 billion in today’s dollars, to rescue ailing banks. That is slightly less, proportionate to the national economy, than the $700 billion, or roughly 5 percent of gross domestic product, that the Bush administration estimates its own move will cost in the United States.
But the final cost to Sweden ended up being less than 2 percent of its G.D.P. Some officials say they believe it was closer to zero, depending on how certain rates of return are calculated.
The tumultuous events of the last few weeks have produced a lot of tight-lipped nods in Stockholm. Mr. Lundgren even made the rounds in New York in early September, explaining what the country did in the early 1990s.
A few American commentators have proposed that the United States government extract equity from banks as a price for their rescue. But it does not seem to be under serious consideration yet in the Bush administration or Congress.
The reason is not quite clear. The government has already swapped its sovereign guarantee for equity in Fannie Mae and Freddie Mac, the mortgage finance institutions, and the American International Group, the global insurance giant.
Putting taxpayers on the hook without anything in return could be a mistake, said Urban Backstrom, a senior Swedish finance ministry official at the time. “The public will not support a plan if you leave the former shareholders with anything,” he said.
The Swedish crisis had strikingly similar origins to the American one, and its neighbors, Norway and Finland, were hobbled to the point of needing a government bailout to escape the morass as well.
Financial deregulation in the 1980s fed a frenzy of real estate lending by Sweden’s banks, which did not worry enough about whether the value of their collateral might evaporate in tougher times.
Property prices imploded. The bubble deflated fast in 1991 and 1992. A vain effort to defend Sweden’s currency, the krona, caused overnight interest rates to spike at one point to 500 percent. The Swedish economy contracted for two consecutive years after a long expansion, and unemployment, at 3 percent in 1990, quadrupled in three years.
After a series of bank failures and ad hoc solutions, the moment of truth arrived in September 1992, when the government of Prime Minister Carl Bildt decided it was time to clear the decks.
Standing shoulder-to-shoulder with the opposition center-left, Mr. Bildt’s conservative government announced that the Swedish state would guarantee all bank deposits and creditors of the nation’s 114 banks. Sweden formed a new agency to supervise institutions that needed recapitalization, and another that sold off the assets, mainly real estate, that the banks held as collateral.
Sweden told its banks to write down their losses promptly before coming to the state for recapitalization. Facing its own problem later in the decade, Japan made the mistake of dragging this process out, delaying a solution for years.
Then came the imperative to bleed shareholders first. Mr. Lundgren recalls a conversation with Peter Wallenberg, at the time chairman of SEB, Sweden’s largest bank. Mr. Wallenberg, the scion of the country’s most famous family and steward of large chunks of its economy, heard that there would be no sacred cows.
The Wallenbergs turned around and arranged a recapitalization on their own, obviating the need for a bailout. SEB turned a profit the following year, 1993.
“For every krona we put into the bank, we wanted the same influence,” Mr. Lundgren said. “That ensured that we did not have to go into certain banks at all.”
By the end of the crisis, the Swedish government had seized a vast portion of the banking sector, and the agency had mostly fulfilled its hard-nosed mandate to drain share capital before injecting cash. When markets stabilized, the Swedish state then reaped the benefits by taking the banks public again.
More money may yet come into official coffers. The government still owns 19.9 percent of Nordea, a Stockholm bank that was fully nationalized and is now a highly regarded giant in Scandinavia and the Baltic Sea region.
The politics of Sweden’s crisis management were similarly tough-minded, though much quieter.
Soon after the plan was announced, the Swedish government found that international confidence returned more quickly than expected, easing pressure on its currency and bringing money back into the country. The center-left opposition, while wary that the government might yet let the banks off the hook, made its points about penalizing shareholders privately.
“The only thing that held back an avalanche was the hope that the system was holding,” said Leif Pagrotzky, a senior member of the opposition at the time. “In public we stuck together 100 percent, but we fought behind the scenes.”

There is a better much more comprehensive plan available. The one that F. D. R. put forward in 1933. And that which Lyndon Larouche is offering today. By now the investment bankers should truly be seen as the criminals they are. As they are hauled off to jail Larouches plan should be implemented. If one would take time to look it over you would see that it is vastly superior to what you are showing here. We need to start listening to someone who understands economics and the history that got us her in the first place. Thanks for putting forth the view that we should not follow the bankers. Keep up the good fight investigate more and share the news. Thanks, Randy

Won’t work until the market bottoms. This might be in another year. At which time, it seems likely that 40% to 50% of the mortgages in the US will be underwater, with the homeowner owing more than the property can sell for.

Nothing like rewarding those who should have never gotten into the house they can’t afford! What about the 90% of home owners who saved, put a down payment and, faithfully paid monthly by sacraficing all the good things that those lushes do. I say let them all sink along with the bank.

We think the economy will stand up and recoop without a bail out. We feel that the banks are just crying out to get money from their loss.

The banks loaned money to people who bought houses. Most of the foreclosed loans were with variable rate . At the beginning the banks view as good to have a few return since the first 3 years of payments of a loan is mainly interest. They figure out they get extra money by reselling said house. They just did not know that a long line of people were going to do the same. Well banks live and learn. Next time may be go to customers in trouble and offer a fix very low rate and reverse your variable rate. In the meantime too bad. It should be your loss for bad management. None of the American people should be responsible if you cannot run a business. Stop crying get back to business and all will be fine.

WE ENCOURAGE ALL SMALL BUSINESS OWNERS TO FOLLOW IN OU PATH AND SEND CONGRESS THE AMOUNT OF MONEY YOU NEED TO BE BAIL OUT. IF THEY ARE GOING TO BAIL BIG BANKS FOR BAD MANAGEMENT WHY NOT ALL SMALL BUSINESS. WE DID NOT HAVE BAD MANAGEMENT JUST LACK OF WORK DUE TO THE BIG BANKS BAD MANAGEMENT. SMALL BUSINESS ARE THE CORE OF THE AMERICAN ECONOMY. I SAY BAIL US OUT FIRST. SINCE WE ARE A VERY SMALL BUSINESS OUR LOSS IS ONLY $29,000.00. CUT US A CHECK THAT SURELY WILL HELP US.

This will never happen, because Congress will never go for it. It cuts the “slop trough” that so many have been feeding out of these many years. ACORN will not be rewarded(a Democratic and a fraud-laden project), Labor Bosses would not get a cut of the pie, no cream for Senators and Congress Men and Women to put special project into a bill that will be hidden from American people.
No money for “all the extras” that the Democrats receive from Lobbyist and from Earmarks. Oh, I know some Republicans feed from that trough also; however check the records the Democrats get the lion share of this, whether they are in the Majority or Minority in Congress. But speaking as an American Taxpayer and Small Town American, I would love to see it.

Thank you for your common sense approach. As a small business owner, I am amazed at the audacity of the banks and Wall Street to insist that “everybody else” pay the price of their stupidity. If they do in fact hoist this bailout on our shoulders, you can bet I will look to the government to bail me out when my small business goes under due to the higher tax burden on us mainstreet-ers.

For those who keep mentioning Community Reinvestment Act of 1977. Please don’t just read the interpretation of the act, but also look into how it was implemented at these banks. Let’s take a look:
1. CRA requires that banks lend to Low- and Moderate-income borrowers.
2. How does the bank know that the borrower is low or moderate income? The bank collects! income information.
3. To maximize CRA credit, most of the banks would package the CRA loans and sell them for a premium. But to qualify these loans for the premium, certain requirements had to be met, such as DTI (debt-to-income ratio) had to be reasonably low; and a limited variety of loan programs was available (no neg am, mostly fixed and ARMs over 5 years)

So we have here a fully documented loan with a DTI under (majority of cases) 42% (including credit cards and auto loans, etc.) And since the loan was subject to DTI, and the borrower didn’t make much, the loan amounts were low. Also, the borrowers in most cases used subsidized down payments, making the loan-to-value ratio lower than 90% (I’ve seen LTVs as low as 37% on CRA loans). That’s what a straight CRA loan would look like.

What got us into trouble, are loans with a high LTV and DTI, with an introductory rate and often negative amortization, or short ARM term; and STATED INCOME loans, also known within the industry as “liar’s loans”.

Not defending, just informing…

Nobody bails me out when I overextend myself.Why should wall street & the realestate markets be any different?

It seems to me that responsibility is the key word in any of this talk. The resposibility of the people who signed the papers to get their sub-prime loans knowing they couldnt pay it back. The responsibility of the lender to perform due diligence in checking out the borrowers thoroughly. The responsibility of Wall Street to not use our monies as private slush funds to increase their wealth instead of ours. The responsibility of our elected individuals to act as “our” representative, not the bankers or Wall Street. And finally, the responsibility of every citizen in our country to hold our elected officials accountable to us, not business and it is their responsibility for them to institute laws to protect the “responsible” citizens of our country that signed the papers, trusted their Wall Street advisers, and do not spend beyond their means. This is no longer a crisis to be blamed on a certain party or belief. It is a crisis of us responsible citizens truning a blind eye to what has been happening for years.

I think this is a refreshing thought and may actually work. It allows us that are responsible to still be able to afford some of the things we need to make a go of it….like food, gas, a job, and a roof over our heads. I agree that it may also allow those on Wall Street and in our Nation’s capital to see that we are going to be responsible for watching that this doesnt happen again!!

Thank God, the voice of reason! I am so sick of the “brilliant financial types” that seem to think the rest of us are just plain stupid! I am sick of the politicians pandering to them for political power…the peoples voices were heard today…we will not put up with the kind of “carpet bagging” that has been going on for decades…both sides of the isle!

Yes, America maybe hurt a little, but we will be better if we stick to our guns and not let them pass a bill that won’t work….more people will be hurt….and Wall Streeters will walk away with millions in their pockets, AGAIN!

I think this plan can work, we need to give it a try, putting the money (and power) in the hands of everyday Americans is the best way to dig our way out of this mess!

Stick to your guns America!

Let’s hold Senator Dobbs and Franks feet to fire along with rest of Democrats and Republicains who took money from Lobbist from Wall Street. Do not vote to bail out Wall street. Insure loans or give reduced interest rates on home loans. Stop the greed!

Better yet, I would rather have the government paydown the existing debt of homeowners to a point where they can debt dervice their mortgage. If we are going to help someone, help the main street guys. not Wall Street. This in turn will stop future foreclosures and pay down the MBS with the result of more liquidity for the banks and strengthen their balance sheets. Homeowners have to agree not to sell the home for 15 years. If they sell earlier goverment gets recapture if they keep it fifteen years gov gets nothing.

Hold on one second please! If anyone listened to the debate today, as I did, I can tell you there are representatives that get what’s going on, AND offered some tidbits as to how to fix it!
If I heard correctly over the last few days, the credit markets are frozen, since they CANNOT loan money legally. When their “assets” were ordered to be devalued by the regulators, they were REQUIRED by law to put the value on their balance sheets of these assets as greatly reduced pricing. Once the balance sheet is out of whack….they don’t have enough reserves to cover their losses, EVEN if the asset is a good one! SO, the bank cannot issue any money.
Its an accounting problem (that is showing a REAL problem) For now, all they have to do, is change the required cash percentage on reserve, so their balance sheet is back in line, and give them time to work out the bad assets!
There are a lot of corrupt cronies behind this that caused the problem, in an attempt to grow socialism! Change the regulations on cash reserves, and let free markets work this problem out!
Thank Bill Clinton for pushing the banks into this situation!

Makes sense to me! Those that played have to pay.

I suggest that you forward this to every member of congress. Great premise.

Funny, I’ve said something along these lines as well. I thought it should be that those “subprime” borrowers who were socked with “PMI” insurance should get their rates bought down by the insurance or….the insurance could take the entire hit. Why don’t we hear about “PMI” relieving the banks…, anyway?

Yes, it probably is better to bail out anybody but Wall Street, on the other hand bailing out the homeowners who should never have had a loan in the first place is unlikely to do anything more than stretch out the problem and would likely just make it permanent. The historic homeownership rate in the United States for many years was 64% to 65%. The 1995 strengthening of the CRA (Community Reinvestment Act) boosted that to 69%, which has since backed off a shade to 68% or so. We have to face facts that the extra four or four and a half percentage points represents people who were put into loans by government fiat, not by underlying economic realities such as value of the secured collateral or the capacity and willingness to repay. Bailing out those people doesn’t remedy that basic mismatch. And the bailout would also create moral hazard among, again, politicians, who would surely also bailout people who haven’t yet gotten a loan under CRA. The result would be in effect to socialize at least 6% of the housing stock and expand that in the future.

There is an extra advantage to this plan. By selling a house at a interest rate, the government will collect more income tax from the homeowner, because the deduction for mortgage interest rate would be lower.

This “proposal” sounds just like the thinking that got us into this mess.

o YOU MUST HELP HOMEOWNERS DIRECTLY!! If you want the support of the American people to fix the mess! Pass a bill that will deal directly, immediately, definitively to the problem of PREVENTING ANY FURTHER FORECLOSURES, Adjust mortgages to the current ACTUAL value of the home so people are not UPSIDE DOWN!! ADD BANKRUPTCY OPTIONS for homeowners who no longer have other options because their lenders WILL NOT work with them to modify the mortgage amounts. STOP BAILING OUT WALL STREET AND LENDERS WHO CAUSED THE PROBLEM and START HELPING HOMEOWNERS!!!
USE COMMON SENSE…. Help the PEOPLE, with the PEOPLES MONEY! LET THE UNSCRUPULOUS LENDERS AND INVESTORS FAIL. Open opportunity for healthy “good” institutions to flourish!
o There are 305,265.985 people in the US? IF we gave EACH of those people 1 million dollars to invest, as they will, pay off their debts and make deposits. WOULDNT THAT be MUCH CHEAPER than what our government is doing without even knowing if it will work? Wouldn’t EVERYONE then be “solvent” and able to invest and spend in the open market? Wouldn’t banks then have the “bad debt” off their books and move toward ability to lend again. Wouldn’t credit markets re-open if bad debts were paid? C’mon people!
o
o Or here’s another idea. Set up a “holding bank” that would purchase all the “bad loans” write them down to current value. Keep homeowners in the home and paying taxes. THEN re-sell the newly solid investments BACK to banks and thereby paying back the taxpayer.
o
o I’m no economist, but its just common sense that if you want to FIX the “root of the problem” you have to address THAT problem.
o
o Possibly the real issue with coming to a substantial common sense approach is that our “government officials” have taken HUGE campaign contributions from many of these companies and thereby are shackled to them in debt. NOT to mention that many of those same people are highly invested in these firms. But hey…I guess that’s AMERICA..SCREW the people who actually bolster up our tax base on their very shoulders. Lets just break their backs!

This whole idea of We The People aiding Wall Street with their casino mentality has me wondering, “When did we become a hard-core socialistic society bending over backwards for Richy Rich? I guess I’ve been living in a rose-colored bubble; I would have never guessed that this could ever come before the table of those we trust to run this country! What is free about this new kind of enterprise?

You leave a fundamental part of the problem out of your article. This problem began in 1992 with a push from the Federal Governemnt to make mortages available to people less qualified. This goal was pushed forward incrementaly by the Congress and the Administration through the 1990s. Using the justice department to threaten lawsuits if the Banks didn’t abide by the new regualtions/laws and loosen up on lending standards. Through 2007 the banks continued down this path at an ever quickening pace. Everyone assumed that since it looked like the plan, to provide the “American Dream” as a right that everyone regardless of credit should have, was working nothing could go wrong. However, as anyone who has studied history knows economics is cyclical and the good times came to a halt and the experiment that government had perpetrated on the taxpayer had blew up in our face. Sadly we let them do it for our own reasons, prosperity being chief among them. Now, in a time of crisis the average american wants to whine about tough times and tough decisions all the while forgetting about the years of excess and aboundance that we all participated in. This is the nature of Governemntal interference that our forefathers warned us about. We have stood by and allowed Government to interfere in our freemarkets to create this problem and now all of a sudden we do not want the Government to interfere to clean up the mess we allowed it to make. We are truly doomed as a society if we cannot come to grips with this truth and make sure we do not allow it to happen again. Up until the 1990s our forclosure rate in the US was at or under 1% annually primarially because there was no such thing as a subprime loan. Banks would not loan to people with poor credit history and inssuficient income. This crisis was brought on by Governmental interference and sadly cannot be corrected without the same. Once its corrected though we need the Governement to quit forcing banks to loan to people that wouldnt normally qualify.

I am one of those citizens whos income places them just above the poverty line enough to keep me out of the realm of State and Government assistance. It is a struggle needless to say for my family and I to make ends meet from paycheck to paycheck. Being where we are in the financial ladder, we have been turned down in the past for Morgage loans to get us out of the less than desirable area we reside in. In my honest opinion, I think this bail out (from what I have been able to hear about that is) is very unfair to my family and numerous other families in similar situations; that being told “No, you do not qualify for a Morgage loan…” Since we do not qualify, how can they now tell us that we “Have” to contribute to the repayment of the debt when we weren’t even involved in the first place? We pay enough of our income out to support the War efforts (fuel, grocery, other items which have reciently had the taxes raised on them) so why now must we also pay to bail out companies who turned us down when we needed help? Why do we have to pay for others greed? What is going to be done for us then, if we are forced to pay for someone elses mistakes? Will my student loans be forgiven once all is said and done? Will I be given a “Free Pass” to complete the education I had to stop pursuing by taking part in helping out big corporations? Are they going to give me a job and pay me 4 times what I make now, so I can finally breath easy knowing my family will have food on the table and the bills will be paid? No, I think not. The foot that holds me down will still be there, only now it will be pressing down with even more force; I will be lucky to get half a breath before the next push comes.

Let’s NOT Bail Out Main Street NOR Wall Street. Here’s why:

Wall Street deserves to belly up for selling bad mortgages to UNQUALIFIED Main Street. You deserves to belly up for buying a home you can’t afford. Don’t blame Wall Street for selling and you accepting a mortgage you can’t afford unless you are forced to sign the contract at gunpoint. Know what you sign. If you don’t understand, consult with an attorney. Ignorance is no defense in a court of law.

The same is true buying a car. If you can’t make the car payments, it gets repossessed. It’s not the dealer’s fault that you bought wheels you can’t pay for.

What about Credit Card Debts? Who forced you to charge all of the stuff you can’t afford or need and can’t pay for? Assume some responsibility!

The only Main Street people I have compassion for are the ones who fall on hard times because of illness or job loss. Here I’m willing to help until they are on their feet again.

liked show n mike, hes smart ,witty n can explain any subject very nicely. letterman better watch out! p.s. also liked house band, but please get a new lead singer!!