By Eddie Griffin
Wednesday, October 01, 2008
Before the Bailout Rescue Plan come to the table, let me make these recommendation a Homeowner Bailout Plan before Wall Street Bailout.
I APPROVE the proposal to raise the F.D.I.C. limit to $250,000 with an optimistic outlook for incomes and deposit levels of the future. The average American today has nowhere that amount of liquidity. But raising the limit will allow some depositors to escape from risky money market accounts to safe, government-insured havens.
The real solution begins with stopping the bleeding, i.e. the implosion of the housing market. Instead of allowing financial institutions and banks to peel off their non-performing assets, such as foreclosed properties, and sell them to the U.S. government and leave the tax payers stuck with the glut of empty houses, we should utilize the original mortgage bailout provisions, and our equity in Fannie Mae and Freddie Mac, to relieve homeowner now on the brink of foreclosure by re-financing their loans over a longer period of time, and keep mortgage payment at about the same rate.
This will allow homeowners to save their homes and make their payments. The original mortgage holders will be bought out by the American taxpayer, at current market rate, and not at inflated book value.
Seeing that financial institutions cannot implement the mortgage bailout plan already on the books because of the way mortgage loans are packaged and leveraged, the government is better situated to re-finance homeowners’ loan, because of our ownership of Freddie Mac and Fannie Mae. In fact, it would be better to first buy out the private investors in those institutions. Otherwise, those who created the housing problem would be rewarded by the government equity stake riding the market up, or having the government bail them if it these institutions tank.
Wall Street can pay their executives whatsoever they wish, as long as the taxpayer’s money is not involved or put at risk. With government loans and risk must comes government oversight and new regulations. The more asked, the more risk, the more oversight is necessary, and more equity should go to the taxpayer. Otherwise, let Wall Street borrow from China, or wherever else financial executives have their offshore accounts.