I just want you all to read it & weep...when it comes to money both parties are selling us out...that's ALL of us. I saw this with NAFTA...GATT & every other time.

Now! Can any DEM tell me again why they think DEMS are for the little guy when they continue to cave on the REALLY important bread & butter issues of working Americans????

Again...we will be stuck paying for all of Big corp's blunders & products we KNOW aren't good...I might add.

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.



http://foxforum.blogs.foxnews.com/2008/09/25/jpinkerton_0926/

Bailout anybody... With MY money.

I do not think so.

I am serious in that I will seek the immediate removal from office of anyone that signs a bailout. If mine is the only voice heard, so be it. If it leads to my death or incarceration in a Patriot Act facility... SO BE IT.

ANY KIND OF BAIL OUT. It is time to face the music and FIX the problem, not give it more paper to wipe is ill-assets with.

I am quite proud of those Republicans that initially stood firm against this (I am sure some Democrats did also but are silient for fear of party).

The false understanding that this bailout will fix the problem will be shown over time to be just what it is... A false premise built upon a false assumption of an artificially driven market.

Well if nothing else it should force the banks to reduce their interest rates.

It is not the banks interest rates. Those interest rates are a symptom not the actuall sickness.

The sickness is artifically high housing costs.

If we do not do this bail out those houses will have to come down in price to their actual worth.

Which will make it possible for people at all ends of the spectrum that is our diverse population to actuall buy a home of their own.

At a price they can afford.

Sure there will be an adjustment period. Perhaps a year of hardships for the average citizen.

It will be worth it. Prices will come down because they will have to. You can only charge what the market will bear. If the market can not bear your charges you will be unable to move product unless you bring your profit taking to an end and lower prices to the point of affordability for the larger part of you customer base. If you do not do this your business will fail. If your supplies do not do this their business will fail.

Can you handle the hardships for a year to ensure your grandchildrens future in a real FAIR MARKET.

I AM WILLING.

Listen....if all the govt. did was force down interest rates that would help people to PAY THEIR debts!

These banks folding is such bull when they had ample time to renegotiate these loans & interest rates instead of foreclosing. The banks are so wrong...

Banks are not 'folding' they are being bought by other banks.

can you say economic warfare.

I do believe we were warned about this several years ago by someone everyone else thought was a crackpot at the time.