The Common Sense Fix instead of the Bailout

Dave Ramsey is asking us to pass along this plan as an alternitive to the 700 billion bailout that is being proposed in Washington DC.

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.

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.

Why cant this kind of solution be passed? The basis for passing the bailout is the same as was used in passing the patriot act. It’s all about Fear.

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3 Responses

  1. Some pretty good ideas here. Certainly better than Carte Blanche throwing money a corporate executives to party with.

  2. OK It has been almost a year Jan15,2009 / Feb 07 selling the Trojan suit SO WHAT HAPPEN !
    Has there been any more improvements on the Trojan suit has there been any interest in many more of them
    I would love a fire/ rescue suit that can left and/or lower twice the wieght up and down three flights of stairs repeatly and exchanging the Bear gas spray can for to the fire jell that well not burn for protecting people and/or a fire jell blanket to wrap around victims to carry them out

  3. 1. I like giving some of the relief to people as opposed to the institutions that put us in this mess. Although the individual’s responsibility is the same as the corporate, I would still rather see relief going that way. After all, who is paying for all of this?
    II. Right on target but this should of and could of been done years ago. The “special interest boys” up on capital hill have been blinded by the allure of greed.
    III. This makes too much sense. Stimulate the economy with a tax cut? Will the current power brokers let something this Reagenesque happen?
    Why can’t this kind of solution be passed? I have come to the conclusion that our leaders have lost their minds to greed and self interests. Anything involving this much common sense does not stand a chance.

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