Instead of saving the banks and financial institutions by buying up all this bad debt, and effectively making the individual home owner pay TWICE for his or her mortgage (once for the note, and once for the tax burden from the $700B package), should we not just absolve the lender of the debt.
Step 1: Government buys up the bad loans.
Step 2: The nation is stuck with paying off this $700B somehow, perhaps over time.
Step 3: The individual borrowers and home owners are absolved of their debt (since they will collectively owe the $700B anyway) and are handed free title to their mortgages.
I know that’d free up a lot of wealth to get back to paying down other debts (credit cards), increasing spending in other areas and getting the people back on their feet.
Thoughts?
Certainly, we would have to do something for the good borrowers who would not benefit from my plan, and certainly bad borrowers dont’ deserve breaks. However, bad bankers deserve breaks even less. And, if you give the poor folks their “40 acres and a mule”, it might just turn around the economy an an unprecedented way, even though many undeserving folks might benefit.
Related posts:
- Re: Pressure on banks 2 make high risk loans 2 borrowers w/ poor credit: WHAT YEAR did it start & WHO started?
- Should the government bail out Mortgage lenders and Banks who caused this mortgage crisis?
- In your opinion, is this economist correct in his assessment that bankruptcy is better than a bailout?
- How will this bailout work?
- How may of you really think there should be no serious oversight with a 700 billion bailout to the banks?