Roll Your Own Bailout, It's Easy!

Have you actually read the bill that Secretary Paulson and his Goldman assistants wrote for Congress? Not the current version (I shudder thinking about it) with all its inserts from financial industry lobbyists, but the first version. It was beautiful in its simplicity and proved that revolutions can be initiated by the stroke of a pen in societies ruled by law -- as long as ruling elites supports them.

It got me thinking. I have a mortgage. I still owe a lot on it. People in my neighborhood are in the process of foreclosure. And still others are struggling to pay rents that spiked in the real estate bubble but show no sign of coming down with housing prices.

I decided to use the treasury's proposal as a template for one that would help me and my neighbors. Paulson's bill is so user friendly, that it took me only 15 minutes just now to convert it from a bailout for billionaires to a "Homeownership For All" act. Scroll down to read my proposal to Congress.

Some of you will be asking, "Where will the money come from? We don't have any trillions left!" That's a silly question. We didn't have trillions for the war. We don't have trillions for this bailout either. The government is essentially printing money to pay out these trillions. Well, not actually printing it -- but it is pledging to borrow huge sums of money to meet these obligations. Who has to pay that back? That will be decided in the future in the struggle between the rich, the middle-class and the poor over taxes and the federal budget.

Yes, the dollar will crash (it's backed now by bad mortgage investments thanks to Paulson's bailout). Yes, there will be inflation. But that's all happening already. When things get this crazy, it's no longer about amounts of money -- what's really being negotiated in Paulson's bailout (and mine) are social relations. In other words, Paulson is (as we speak) winning society's commitment exchange future payments by all Americans for worthless assets owned by a bunch of rich people, pension funds and university endowments.

In Paulson's world, struggling homeowners and renters will not get any such deal. Their relationship to society stays the same: if they fail financially, then eventually a sheriff comes to their door and orders them out of their home. All I'm doing is proposing the same kind of relationship-shift for ordinary Americans with regard to housing. In my proposal, the government buys our mortgages themselves and sets new terms that we can afford. Maybe "the Secretary" will even decide to forgive some of our principal. Is that unfair? Maybe. But the consequences are so dire -- millions of Americans out on the street, whole neighborhoods boarded up, etc... -- we have no choice! It's just like what Paulson says, except not ridiculous.

And don't forget the renters! We'll just buy their apartments and give them mortgages with good terms. The dream of home ownership vs. the dream of Yacht ownership. Which do we value more in America? Time to decide.

And who knew how easy doing this would be! It took those smarties from Goldman to show us. Tomorrow, if I can squeeze it in, I'll do a search-and-replace on my housing proposal to generate a proposal for a national health care system. My friend Marc just told me the total market capitalization of the top health insurers is well under a trillion. And unlike in Paulson's scheme, we'd be buying profitable, healthy companies, not worthless investments. Sounds like good business to me!
__________

A Financial Bailout Proposal to Congress from the American People

(Generated with minor edits to Henry Paulson's bailout proposal to Congress.)

The following is the legislative proposal from the American people to grant authority to the next Secretary of the U.S. Department of Housing and Urban Development to protect Americans from foreclosure and convert renters into homeowners:

Section 1. Short Title.

This Act may be cited as The Homeownership For All Act.

Sec. 2. Purchases of Mortgages and Rental Properties.

(a) Authority to Purchase.-The Secretary is authorized to purchase, and to make and fund commitments to purchase, on such terms and conditions as determined by the Secretary: mortgages from any financial institution having its headquarters in the United States, and residential rental properties in the United States.

(b) Authority to adjust mortgage payments- The Secretary is authorized to reduce mortgage payment terms to ensure homeowners can remain stably in their homes and work more quickly toward full home ownership.

(c) Authority to convert rental agreements into mortgages- The Secretary is authorized to grant mortgages to renters in properties purchased by the the Secretary. The principal of such mortgages will be shares in the amount paid for the properties. The Secretary is authorized to set mortgage payment terms at levels that will allow residents to remain in their homes and work quickly toward full home ownership.

(b) Necessary Actions.-The Secretary is authorized to take such actions as the Secretary deems necessary to carry out the authorities in this Act, including, without limitation:

(1) appointing such employees as may be required to carry out the authorities in this Act and defining their duties;

(2) entering into contracts, including contracts for services authorized by section 3109 of title 5, United States Code, without regard to any other provision of law regarding public contracts;

(3) designating financial institutions and landlords as financial agents of the Government, and they shall perform all such reasonable duties related to this Act as financial agents of the Government as may be required of them;

(4) establishing vehicles that are authorized, subject to supervision by the Secretary, to purchase mortgages and rental properties and issue obligations; and

(5) issuing such regulations and other guidance as may be necessary or appropriate to define terms or carry out the authorities of this Act.

Sec. 3. Considerations.

In exercising the authorities granted in this Act, the Secretary shall take into consideration means for-

(1) providing stability or preventing disruption in the lives of millions of Americans who are in danger of displacement because of foreclosure or inability to afford high rental prices; and

(2) increasing home ownership and general capitalization of American families by providing mortgage relief and converting rental properties into owned homes; and

(3) protecting the taxpayer; and

(4) getting ours because, damn it, you got yours.

Sec. 4. Reports to Congress.

Within three months of the first exercise of the authority granted in section 2(a), and semiannually thereafter, the Secretary shall report to the Committees on the Budget, Financial Services, and Ways and Means of the House of Representatives and the Committees on the Budget, Finance, and Banking, Housing, and Urban Affairs of the Senate with respect to the authorities exercised under this Act and the considerations required by section 3.

Sec. 5. Rights; Management; Sale of Mortgages and Rental Properties.

(a) Exercise of Rights.-The Secretary may, at any time, exercise any rights received in connection with mortgages or rental properties purchased under this Act.

(b) Management of Mortgages and Rental Properties.-The Secretary shall have authority to manage mortgages and rental properties purchased under this Act, including revenues and portfolio risks therefrom.

(c) Application of Sunset to Mortgage-Related Assets.-The authority of the Secretary to hold any mortgage-related asset purchased under this Act before the termination date in section 9, or to purchase or fund the purchase of a mortgage-related asset under a commitment entered into before the termination date in section 9, is not subject to the provisions of section 9.

Sec. 6. Maximum Amount of Authorized Purchases.

The Secretary's authority to purchase mortgages and rental properties under this Act shall be limited to $700,000,000,000 outstanding at any one time

Sec. 7. Funding.

For the purpose of the authorities granted in this Act, and for the costs of administering those authorities, the Secretary may use the proceeds of the sale of any securities issued under chapter 31 of title 31, United States Code, and the purposes for which securities may be issued under chapter 31 of title 31, United States Code, are extended to include actions authorized by this Act, including the payment of administrative expenses. Any funds expended for actions authorized by this Act, including the payment of administrative expenses, shall be deemed appropriated at the time of such expenditure.

Sec. 8. Review.

Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency.

Sec. 9. Termination of Authority.

The authorities under this Act, with the exception of authorities granted in sections 2(b)(5), 5 and 7, shall terminate two years from the date of enactment of this Act.

Sec. 10. Increase in Statutory Limit on the Public Debt.

Subsection (b) of section 3101 of title 31, United States Code, is amended by striking out the dollar limitation contained in such subsection and inserting in lieu thereof $11,315,000,000,000.

Sec. 11. Credit Reform.

The costs of purchases of mortgages and rental properties made under section 2(a) of this Act shall be determined as provided under the Federal Credit Reform Act of 1990, as applicable.

Sec. 12. Definitions.

For purposes of this section, the following definitions shall apply:

(1) Mortgages.-The term "mortgages" means residential mortgages that in each case originated or issued on or before September 17, 2008.

(2) Secretary.-The term "Secretary" means the Secretary of the Department of Housing and Urban Development.

(3) United States.-The term "United States" means the States, territories, and possessions of the United States and the District of Columbia.

Comments

[Dynamohum]

"Whole neighborhoods boarded up", that about says it all. And who does everybody here believe is going to buy those houses? Not us Americans, probably foreigners. Chinese,Russian, Indian, Thai, etc. The Saudis have bought the Empire State Building for godsakes!! "Ownership society", president boooosh? By whom, everyone other than Americans?

[kyhillbilly]

Time for all lenders, banks and savings & loans to get out of the residential mortgage business. The mortgage lenders have proven beyond any doubt that they are incapable of running that business therefore the federal government should nationalize it all. Not only can they not manage the mortgage market they have manipulated it and corrupted it to the point of destroying it.

The federal government should be the only source of residential mortgages and they should be low to no interest mortgages. Low to no interest mortgages would allow people to pay off their mortgages instead of being constantly in debt. Instead of a home that sells for $300,000 really costing $900,000 when interest is included it would cost closer to $300,000. The $600,000 difference could go into other more productive investments. Any resell of a home goes through Freddie and Fannie and a newly created Federal Home Loan agency. Second ( or 13th ) homes could be financed through the banks.

A stable housing market is essential to a stable economy and the current situation exposes all of the short comings.

Is this what he was saying? Us hillbillies are a little slow.

[MsMeryMac]

I've thought along the same lines. We can actually use a fraction of that 700 billion to help everyone who is defaulting on their mortgages and set up an agency to help people refinance into better terms. Half the time people can't refinance because their mortgages have been bundled and sold and they can't find out who to go to. If we need to extend mortgages to 40 years right now, so be it.

Congress has already passed an act that requires a minimum of 3.5% equity to be invested by the owner (no 100% financing), and if we need to move that up to 5%, we should. They're also giving a temporary $7500 tax credit to first-time home buyers. I say make it permanent.

Giving money directly to the taxpayers, earmarked for their mortgages, will help keep people in their homes AND keep banks from failing.

[Gidster]

Excellent Idea!
Sign me up!

[schatsie]

Thank you so much,,, McCain 'this is a huge crisis', Paulson, 'of course there is oversight, the words on the paper do not mean what they say'....

OH MY GOD, WE NEED TO RUN THESE BASTARDS OUT ON THE RAILS OR TAR AND FEATHER THEM....

Un fxxing Believable­....it's a huge crisis, all of a sudden, brought to you by lobbiests for lobbiests.­...

[Yermammy]

So, you would leave Section 8 in, huh? Why is that, pray tell.

[23000Days]

Likely a joke.

[moodpost]

Hopefully an oversight. The rest is pretty good, so, really, why leave this in?

[Gidster]

Because in a society where the wealthy are losing their homes, the poorest people still need protections, and face it, with the job market the way it is, there will be more people in need.

[moodpost]

Section 8 offers no protections, so I don't understand your response.

[Yermammy]

Sometimes the simple plans are pure genius. But do you really think the Neocons are going to just lay down, after all of their carefully laid plans? Looks good on paper though! Tell me how I can help.

[ittakesavillageidiot]

i love it. open source legislation. zack exley for secretary of the treasury! wait, ME for secretary of the treasury!

acc. to several reputed scientists (writing in Scientific American in Jan), we could almost completely kick our oil and coal habit with a total of $420 billion in subsidies over 40 years...le­t's write THAT into the bail-out plan.

it would be ironic if Bush/Paulson inadvertently put socialism, or something like it, back on the table, and the people took it and ran with it...

[chucklasker]

Inadvertently? ittakesavi­llageidiot­, they ARE socialists, or more accurately, fascist. They've done more to socialize America than any previous administration, and they're backing it up with citizen-controlling systems like internal spying, "report your neighbor" incentives, censorship, control of the media, stricter travel restrictions, accumulation of power to the executive branch, creation of perpetual wars and emergencies, escalation of the "drug war" and other victimless "crimes," and now government purchasing of private assets. They are doing what Hitler only dreamed of because they have more power, more money, and better technology.

George W.'s grandfather tried to take over this country, and now George W is finishing the job. We Americans have long said, "it can't happen here," but nobody could have guessed 8 years ago that we would be in our current state of oppression and government control. What will another 8 years bring?

[Mickey1]

I think this is the right plan to help the people that need help the most. Tell a friend and a mass multimedia Talking Head about The Homeownership For All Act.

[Mariel]

Okay! This makes sense. As usual, you have given us the answer. If only.