The election of Obama did give him a clear mandate to use the powers of the Executive as well as his leadership in Congress to intervene in the economy. So here's a modest suggestion.
Everyone agrees that in dealing with the mortgage crisis it is critical to keep people in their houses. To do that we have to have ways to renegotiate their mortgages. During the campaign, Obama proposed using federal powers to clamp down on fraudulent lending practices (including the creation of a federal criminal offense), establishing a "Credit Card Bill of Rights" to help prevent people from being driven into bankruptcy in the first place, and reform of the bankruptcy system to allow estate trustees to renegotiate mortgages and an exemption for bankruptcies caused by medical expenses. Those are all good ideas, but there has to be a program to renegotiate predatory mortgages before bankruptcy occurs. The problem is to make sure that such a program is only used in appropriate cases of need to keep people in their houses, not gamed to increase the value of investment properties. Conversely, there is a problem of fairness if people who entered into mortgages they can not pay - whether through stupidity (defined here as "listening to Alan Greenspan") or fraud by lenders - are rescued on terms more favorable than those available to the people who acted prudently and carefully in the first place.
Historically, the way to get a large-scale social welfare benefit of this kind through is to make it extend to everyone: think Social Security and Medicare. It may be that as a combination of politics and economics the only alternative is to give every mortgage holder a one-time shot at a 30-year fixed rate set at a reasonable but not unduly favorable interest rate: say 7.5 or 8.0%. Such a rate is high enough that banks that were careful lenders are not being punished for the misdeeds of others. It is also high enough that people whose mortgages are already below that rate - the people who got good mortgages from prudent lenders -- will have no incentive to take advantage of the program. True, some people in the middle who are not truly in need will benefit, and some people will be unable to make the payments even on those terms and have to face foreclosure. But it is very difficult to conceive of another solution that does not end up rewarding the people who caused the problems in the first place while punishing people who "played by the rules."
A plan of this kind could be an excellent first objective for the new administration. It directly addresses the concerns of McCain supporters as well as Obama supporters, it could garner widespread bipartisan support, and it would demonstrate a clear departure from the Wall Street orientation of the Bush administration's approach. It's only one piece of a solution -- the bailout has to be modified to provide direct incentives for lending rather than just throwing money at banks, for starters -- and there is a lot left out of this description. But it might be a very good place to start.
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The result would be the launch of a National Workforce Housing Program which is much needed.
It would not be a give-away or bail-out since the homeowner would be paying for it by forfeiting the future "free market" appreciati
It would not encourage people that can afford the home they own to get in on a bail-out they don't need.
The "deed restrictio
Homeowners that opt-out of the program would remain "free market" homes and would win or lose according to the marketplac
Bank owned and developer owned homes could also participat
The homes would be scattered and no one would be able to tell the difference between a deed restricted and a free-marke
What can Obama do?
Bush-Pauls
If Bush-Pauls
Otherwise, we are stuck with Bush until January 21, 2009.
Banks are NOT LENDING so it is time to stop the BAIL OUT!
If banks refuse to cooperate then lets stop this GIVE-AWAY!
The Banks must return the funds to the Taxpayers so we can Bail out the Homeowner Walking-Aw
Lawlessnes
What would such a declaratio
Our nation today is a nation of 300 million Plaintiffs
FIRST Obama Technology Project, help restore Middle Class and stop "Homeowner Walkaway Crisis!"
FIVE FACTS:
1. American Taxpayers Own Fannie, Freddie, interest in AIG, and group of Banks!
2. Mortgage Companies and Banks are at CENTER of Housing and Financial CRISIS!
3. Crisis Continues Because Homeowners can not Afford "TRICKY Adjustable Loans" and are Walking Away!
4. The Current FED RATE is 1.0%!
5. Technology (Internet) are Sophistica
Use the Internet, Automation
FIXED rate new loans could be very low, perhaps 2.5% to 3.5%, to Provide New Taxpayer Owned Banks with a "1.5% to 2.5% margin!"
Why such low rates? Because Middle men Removed - Direct from FED Money Rate of 1.0%!
FUNDED Corrupt Banks so Fund American Mortgages!
Automation verifies employment
Eliminates mortgage fees, bank fees, title fees, most verificati
Technology Saves more than Bailouts.
Savings: Pay debts, buy American Green Cars, buy Real Estate, and American goods plus help other countries in crisis by buying their goods!
Removes layers of processing
For some families this could save $500 to $1,500 per month and in some cases more.
If we start bailing everyone out, I need a $50,000 downpaymen
As for helping the economy itself, I would imaging that Obama will in part focus on building and updating infrastruc
Every city has substandar
Quality homes with yards have to be built that are small and affordable for young families. (I don't know that I'd use these megabuilde
These megahomes that have been built need to be divided and remodeled so that multifamil
Loans on affordable houses need to be readjusted with new rates and terms.
This is truly a depression ara crisis that needs a "new deal" type of rescue.
One of the problems that I saw were housing prices during this boom. I looked into buying a home and couldn't find anything within my budget. No new builds and certainly no exsisting homes. Housing needs to be affordable