Why the rush on the $700bn bailout? I have not heard about tons of banks folding in the past week or so, and even the market has turned around since Monday. Why the rush to use tax payer money? Why not flesh out Dave Ramsey’s plan of Common Sense to see if it would pay off? Why not give it a chance before signing off on a deal that’s going to screw up the economy for years to come? I don’t see the Armageddon happening that was predicted by so many. If it becomes tough to get credit for a bit, so what. If a business can’t make payroll or stock its shelves without the use of credit on a daily basis, well then they don’t have a business. If I can’t buy a car because my FICO score is lower than 720, oh well. If I can’t get a student loan because I have a bad credit rating, then that is my fault and it’s something I need to clean up. I’ll have to put my schooling on hold for a bit, oh well. I haven’t bought a house because I don’t have the 20% down payment ready yet, and I was unwilling to go for one of those no money down deals. It sounded too good to be true and it apparently was too good to be true. So, I don’t have a house right now, oh well. I can wait. I can wait until I can afford it. Why build a house of cards? Why create a pseudo environment where low income folks thought they could buy a home? Now they are worse off than before getting into their mortgage mess. It’s ridiculous.
Please, please, please….before voting yes….please someone in Congress, bring up Dave Ramsey’s ideas….don’t be fearful…you can do it. Heck, if you need someone to do it, I will. Just please reconsider before voting….reconsider and consider a new plan….a plan of Common Sense.
From Dave Ramsey
Years of bad decisions and stupid mistakes have created an economic nightmare in this country, but $700 billion in new debt is not the answer. As a tax-paying American citizen, I will not support any congressperson who votes to implement such a policy. Instead, I submit the following three steps:
Common Sense Plan.
A. Insure the subprime bonds/mortgages with an underlying FHA-type insurance. Government-insured and backed loans would have an instant market all over the world, creating immediate and needed liquidity.
B. In order for a company to accept the government-backed insurance, they must do two things:
1. Rewrite any mortgage that is more than three months delinquent to a 6% fixed-rate mortgage.
a. Roll all back payments with no late fees or legal costs into the balance. This brings homeowners current and allows them a chance to keep their homes.
b. Cancel all prepayment penalties to encourage refinancing or the sale of the property to pay off the bad loan. In the event of foreclosure or short sale, the borrower will not be held liable for any deficit balance. FHA does this now, and that encourages mortgage companies to go the extra mile while
working with the borrower—again limiting foreclosures and ruined lives.
2. Cancel ALL golden parachutes of EXISTING and FUTURE CEOs and executive team members as long as the company holds these government-insured bonds/mortgages. This keeps underperforming executives from being paid when they don’t do their jobs.
C. This backstop will cost less than $50 billion—a small fraction of the current proposal.
II. MARK TO MARKET
A. Remove mark to market accounting rules for two years on only subprime Tier III bonds/mortgages. This keeps companies from being forced to artificially mark down bonds/mortgages below the value of the underlying mortgages and real estate.
B. This move creates patience in the market and has an immediate stabilizing effect on failing and ailing banks—and it costs the taxpayer nothing.
III. CAPITAL GAINS TAX
A. Remove the capital gains tax completely. Investors will flood the real estate and stock market in search of tax-free profits, creating tremendous—and immediate—liquidity in the markets. Again, this costs the taxpayer nothing.
B. This move will be seen as a lightning rod politically because many will say it is helping the rich. The truth is the rich will benefit, but it will be their money that stimulates the economy. This will enable all Americans to have more stable jobs and retirement investments that go up instead of down. This is not a time for envy, and it’s not a time for politics. It’s time for all of us, as Americans, to stand up, speak out, and fix this mess.