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Congress Needs to Help Homeowner Occupiers

There isn't anyone in Congress who doesn't think something has to be done.

The question is what do they do?

Their jobs are on the line. If they fail - they are out.

If they upset voters - they are out.

If they do nothing - they are out.

The one common belief is that homeowner occupiers need help.

The problem with the bail-out is that it is bailing out the banks and does not guarantee any financial help reaching street level.

Banks are in the business of risk, they risked, they lost.

I don't expect the Nevada gaming commission to bail me out when I know the rules and lose at the table (an analogy - because you'll never find me gambling/donating in a casino). Nor do I expect the government to bail me out if I get burned on the stock exchange, unless it's indirect and the government has forced me to put money into a pension fund and let that pension fund gamble with exotic bets.

The trouble with bailing out the banks directly is that many people are worried the money will just not get to the right places. They are probably right.

It's a hard pill to swallow - give the gamblers more money?

As I expected it just won't go down.

The solution is to bail out the homeowner-occupiers, not the speculators, and definitely not cover the inflated losses that these dodgy financial instruments have generated.

The solution is at street level. The Fed has to buy up mortgages backed by homeowners living in their homes. That's where they can start. Documented taxpaying owner-occupiers who earn a living and pay their taxes.

Where it ends is anybody's guess. The one thing for certain is that's where it starts. Lower rates, owner-occupiers only and realistic controls. Perhaps nationalising some pension funds in distress. The government will have to provide funds directly to some corporations outside the financial industry in order for them to continue to operate. Not handouts for bad business, but operational liquidity for the businesses that employ people and haven't done anything wrong except trust banks.

Non-financial industry business assistance can be treated on an individual basis, like the government has done time and time again in the past. Hire people, get some money into the system directly where it is needed, anything else will be seen as rewarding bad behaviour.

The banks don't trust each-other so why should the taxpayer trust them? The banks need to help themselves and get together while they still can - merge before they're nationalised or purged. Bite the bullet.

As for politics - boo-hoo. Who's watch was it on? Who failed in their duty?

Congress  - get together and make the announcement. Taxpaying home-owner occupiers. A long term investment in America's future. A safe risk.

The Fed can even make a profit out of it if they get it right.

That's my personal opinion.


Comments: (1)

A Finextra member
A Finextra member 30 October, 2008, 12:36Be the first to give this comment the thumbs up 0 likes

Someone else agrees. Why did it take so long?

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