The common sense fix

[brett636]

http://www.daveramsey.com/media/pdf/the_common_sense_fix.pdf

I've never supported this $700 billion bailout plan, and this plan sounds more feasible and is much cheaper. If you believe in this please send it to your congressmen/women to help get the ball rolling before we end up with $700 billion in more debt.

The Common Sense Fix
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 threestep
Common Sense Plan.
I. INSURANCE
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.

 

[UpstateNYUPSer(Ret)]

There is one side of this that has not really been discussed, at least not that I have seen.

What about those of us who take care of their business? Pay our bills on time, don't over extend ourselves, have a fixed rate mortgage and pay extra on it each month, have adequate insurance, set aside money for our retirement while still ensuring that we leave enough so that we can enjoy ourselves today, pay off credit cards on a monthly basis.

brett, I really like the suggestions that you gave. Each of them should be fairly easy to implement and I like $50B much more than $700B.

Thank you for your efforts in researching the facts for this thread. Dave.

 

[scratch]

This is a great plan, and I am a Dave Ramsey fan. But it makes too much sense and those crooks in office won't be able to play their class and race scare politics. This current problem is a combination of stupid people running things in Washington and greedy people. I wish Dave's plan could happen, we don't need to bail out Wall Street for making bad loans. They will just come back for more money. Some of these people need to be in jail, and I mean politicians and CEOs. JMHO.

 

[av8torntn]

"III. CAPITAL GAINS TAX
a. Remove the capital gains tax completely."

That would be great. Don't think we'll ever see it but it sure would be nice.

 

[UpstateNYUPSer(Ret)]

"III. CAPITAL GAINS TAX
a. Remove the capital gains tax completely."

That would be great. Don't think we'll ever see it but it sure would be nice.

We may actually see it on a short-term basis but not completely. There is talk of suspending it for a few years to give investors incentive to buy some of these distressed mortgages and then hopefully resell them for a profit and not have to pay capital gains on said profit.