Friday, January 23, 2009

If I Were President: The Bailout

I'll begin by saying I don't support a bailout of any kind. But the Democrats must spend, so I just want them to spend the right way.

The source of this entire financial fiasco was the mortgage meltdown. If you want to bring the economy out of recession, you have to start by fixing the mortgage problem. And you don't fix the mortgage problem by throwing money at the problem loans that are going to go into foreclosure no matter how much help they receive. You also don't fix the problem by giving money to the banks without helping the people the banks have lent to.

I propose we take a couple hundred billion out of this upcoming stimulus bill and use it to pay down the balances of mortgages that are current and held by responsible people who can afford to continue paying the mortgage. With $200 Billion, you could pay down 4 million mortgages by $50,000. The mortgage holders not only receive a huge infusion of cash from these paydowns, but the American people would also benefit tremendously. This could pay off quite a few mortgages completely, freeing up a monthly sum of money that will be infused into the economy. The paydown would also help a large number of people who are upside down on their mortgages. These people would now be able to refinance their mortgages at the lower principal amount, if they so desired, reducing their monthly payments, which would also free up cash to be infused into the economy. It's a complete win-win, not only for the mortgage holders, but for millions of people who need help.

I'm sick of the banks receiving billions of dollars without helping a single person with that money. How much better off would we be if the first bailout had gone to pay down mortgages instead of just sitting in the vaults of these huge corporations who love hoarding money?

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