Hi folks, Here is a plan created by an average citizen, my husband. Please take the time to read it and feel free to pass it on to all you know. Maybe it will make the rounds and sink into those so called highly education/trained financial minds in Congress.
Bailout or Sellout?
>
> By Bruce C. Davison
> January 24, 2009
>
> The financial “solutions” put forth by the United
> States Congress immediately prior to the United States
> Presidential election left a large portion of the electorate
> in a state of both astonishment and shock. They were
> astonished by the magnitude of the “crisis” that
> suddenly appeared on the national news. President Bush
> immediately pushed the "crisis" as a catastrophe
> of immense proportions. It was so bad, it required the
> “rush to judgement” mind set not seen since President
> Roosevelt pressed Congress for a “Declaration of War” on
> December 8, 1941.
>
> Bush didn’t get the results he wanted right away.
> Within a couple of the weeks he did get the biggest
> “bailout” the Congress could cobble together.
> Unfortunately the plan called for massive unbridled spending
> and virtually no plan for how or when the money would be
> returned to the people (i.e. reduce the National Debt).
> Bush’s Secretary of the Treasury, Henry Paulson, saw his
> chance to reward his friends in the Banking Community with
> an initial gift of $350 Billion of the taxpayers' money!
> (But wait there’s more, there’s another $350 Billion as
> soon as we can pry it loose from the Congress!).
>
> The shame of all of this is that Congress, Wall Street,
> and the Banking Community has poorly served the people of
> this county. Both the Democrats and the Republicans bear a
> heavy culpability in allowing this travesty to happen.
> Furthermore, they are apparently still blind to the
> alternative solutions to the problem. A problem brought on
> by the twin forces of greed and Political Correctness.
>
> Allegedly, the “toxic” loans generated by Fannie Mae
> and Freddie Mac, “bundled” by Wall Street brokers and
> sold to the Bankers with inflated credit ratings of AAA,
> etc., caused a paralysis of the American economy. This
> paralysis then began to spread, allegedly threatening a
> worldwide depression. Holy cow, Batman! How could the
> smartest and best of our “money handlers” lead us into
> the valley of the shadow of economic death? The causes are
> many but the two major causes are:
> >
> 1. Greed by all concerned and,
> 2. The “Political Correctness” of allowing almost
> anyone to get a home loan backed by Freddie Mac and Fannie
> Mae if the applicant had a pulse and signed on the line that
> is dotted.
>
> Well, enough of this anguish over the spilled milk of
> stupidity and greed that brought us to this sorry state of
> affairs. The time has come “said the walrus” to see if
> some of the damage can be undone before all the money is
> gone down the drain. Hold on to your halo Mr. Obama. Try
> not to grin Mr. Bush, this crisis can be put back in to the
> bottle if we have the collective will to objectively
> evaluate some of the other solutions not offered by McCain,
> Obama, Bush, Reid, Pelosi or any of the other so called
> leadership of this country.
>
> The major portion of the problem resides with the banks and
> the now “toxic” loans that led to massive numbers of
> home mortgage foreclosures. Additionally, the failure of
> numerous banks and other financial businesses, were to be
> expected. The solution must be to stop the foreclosures by
> removing the “toxic” element out of the deal and a
> re-establishment of orderly, reasonable, predictable real
> estate markets.
>
> Obviously, there are and will be other solutions to the
> problem but I want to be sure that at least one of them is
> considered here and now. I call mine the Davison
> Co-ownership and Recovery Plan. Bear with me while we
> consider the following facts:
>
> 1. At no time in the history of the United States real
> estate market has the value of all residential properties
> lost value over any 20-year period.
>
> 2. The value of the vast majority of homes has appreciated
> between 5.5 to 6.5% per year. (In some cases, the value
> doubled or even tripled in a similarly long period, e.g. 20
> to 25 years).
>
> 3. No one in their right mind would rather be tossed into
> the street if only he could stay in his home for the price
> of affordable rent.
> >
> The Plan:
>
> 1. Re-write all of the so-called toxic loans as a
> partnership between the homeowner and the United States
> Treasury. Enough TARP money would be invested in each of
> the homes so that the remaining mortgage to be paid by the
> co-owner would be equivalent to affordable rent.
>
> 2. The value of the equity invested in the home would bear
> interest at 6% per year until the homeowner sold the home or
> bought out the Treasury’s equity by acquiring a second
> trust deed based on the increased over all value of the
> property and the homeowner/partner’s increased income.
>
> 3. The government could wait for the homeowner to buy out
> the Treasury’s equity or it could sell the equity position
> to investors who would be satisfied with a safe, long term
> return of 6% per year, thus retiring a portion of the TARP
> debt.
>
> 4. All monies received from the equity in these loans would
> be available to assure that the Social Security System will
> not run out of money in 2017 as is currently predicted.
>
> 5. The plan would require that the homeowner/partner buy
> out the government’s equity or allow an independent
> investor to be his new partner within 20 years thus
> guaranteeing the return of all of the TARP funds to the
> government plus interest.
>
> The benefits of this plan would be enormous and the cost
> will be less than the $700 Billion already slated to be
> thrown at the problem. Hang in with me a little longer
> while we enumerate these benefits.
>
> 1. The banks that are still in trouble with the so-called
> toxic loans would immediately receive from $10,000 to
> $150,000 of government money for each loan that is
> re-written under this program. Within a few weeks their
> bank’s solvency will be re-established and they will be
> able to expand their ability to write new loans for both
> homes and United States manufactured cars.
> 2. Additionally, small businesses will once again be able
> to have the “bridge” loans they need to facilitate the
> day to day operations of their business.
>
> 3. The millions of homes that have become vacant and many
> of which have become vandalized, would instead, have a happy
> “renter”/homeowner living in them and he would be paying
> off his share of the Co-ownership Mortgage.
>
> 4. The cost of the program would be essentially “$0”
> because all the money would come back to the Treasury with
> interest.
>
> 5. The construction industry would soon return to normal
> because all of the “foreclosed” homes would no longer be
> on the market, depressing prices and causing further loss of
> jobs.
>
> 6. The unemployment rate would soon return to the
> historical low levels of 3-4% because the banking, trust
> companies, and the real estate segments of the economy would
> hire a large number of employees to process the re-written
> loans. The income tax base would increase and provide
> billions of additional tax revenue without a tax rate
> increase on anyone.
>
> 7. The repaid “new equity” portion of the loans would
> come back to the Treasury with interest just at the right
> time to shore up the Social Security Fund to help replace
> the valueless IOUs the government has stashed in the so
> called Social Security Trust Fund. Currently, the Social
> Security Trust Fund is “secured” by thousands of
> non-negotiable bonds that are currently stored in a
> five-drawer filing cabinet in Parkersburg, West Virginia.
> These bonds have the same relative value as a bucket full of
> sand in the middle of the Sahara Desert. Compare that to
> the equity in an owner occupied piece of American real
> estate!
>
> 8. Note, within 3 years the baby boomers are going to
> begin joining the current 35+ million Social Security
> retirees, and there will soon be only approximately 5
> workers for every 2 retirees. We are going to need real
> value in the trust fund to secure their future income.
>
> This plan is obviously short on the “nuts and bolts”
> of the rules necessary to carry out the plan. But it is
> clear that this plan offers a much better result then the
> current plan of dumping money into banks who then won’t
> loan it out because of the uncertainly of the current
> market. I am not in a position to calculate the tremendous
> number of recently lost jobs that would be restored, but a
> restored job is just as good as a newly created one.
>
> If you have stayed with me to this point, I hope you will
> contact your Congressman and make sure he becomes aware of
> the benefits of this plan. Just voting for someone is not
> enough. We occasionally need to bend their ear so they know
> what the people they are paid to represent really want.
>
> P.S. I welcome your comments. Contact:
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