Should the federal government offer foreclosure bailout relief for struggling homeowners?

Yes

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by James Lynne

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Yes, The Federal Government should offer foreclosure bailout relief for struggling homeowners. Too long the financial world has benefited while the average taxpayer in the US has struggled. It is not enough just to bailout the marketplace. It is time to consider options that assist the consumer as well. This administration has repeatedly used the family values platform to its advantage to lull voters into the belief that families matter. Apparently families only matter when they can be manipulated into voting. What value is of more significance to a family than the ability to hold onto its home?

Throughout the Bush administration we have heard the mantra, "Tax breaks to the wealthy benefit the entire economy." Too often we have seen the Bush administration favor tax breaks to the wealthy, to business, and to industry with the message that the trickle down effect would benefit middle class America. What has actually transpired is the ultimate irony. The Bush economic plan has finally disrupted the lives of the wealthy, industry, and business to the point they are screaming loudly, begging for the same relief the average taxpayer has been requesting all along.

Unfortunately, when the taxpayer asks for relief, the answer from the Federal Government is, "Tighten your belt. The economy is strong." We've been hearing Republican politicians, led by George Bush for the last eight years reiterate almost non-stop that the economy is strong as we've seen more and more layoffs, more and more foreclosures, more and more families fail. The ultimate "cornerstone" of the American culture is the American Family. How often have we heard this from politicians as they beg for votes? Apparently the cornerstone of the American culture is not the family. It is apparently the rich, the wealthy, the moneyed because that is the group the Federal Government seeks to rescue at the expense of the family.

No bailout plan should occur that does not allow for the American citizen facing foreclosure to participate in financial relief. Part of the bail out plan should include the opportunity for any family facing foreclosure to refinance at a lower interest rate, with missed payments being reamortized into the loan. Rather than have financial institutions discount these mortgages as uncollectables that will have to be assumed in the government buyout only to be resold, they would in effect, be sold back to the mortgagee for a commensurate discount. This would save the taxpayer his home and it would save the financial institution from having a total loss on the debt. It would also save the taxpayer having to accept a property that may or may not become a return on the investment.

Rather than having the government socialize the bad debts of greedy financial institutions, while privatizing the profit this plan would be privatizing the debt and socializing the profit. Greedy financial CEOs and stockholders have benefited for too long while the average citizen has floundered. Let's take it one step further, by thinking outside the box to a somewhat revolutionary buyout plan where everyone is a winner.

Another option for the buyout that would give the struggling homeowner relief is to redirect the focus of the buyout. Instead of using the $700,000,000,000 to buy bad debt from failing financial institutions that have already demonstrated poor stewardship of resources and poor financial management, rebate this money to the taxpayer to stimulate the economy through citizen debt relief. There are approximately 225,000,000 citizens in the US over the age of 17, roughly 75%. Rebate to each citizen 18 and over, the sum of $311,000. That would roughly equal the amount Congress is considering for bailing out financial institutions, rewarding them for their mismanagement of America's financial security, $700,000,000,000.

If each citizen above the age of 18 received a "bailout" of $311,000, and then paid a 30% income tax on that, back to the government that would roughly (for the sake of easy math) equal $95,000 per person times 225,000,000 back to the government, leaving each individual with roughly $215,000 for use in stimulating the economy. Couples would receive approximately $430,000, enough to pay off their home mortgages, which in turn would bail out the struggling financial institutions. Those without homes, and that is roughly 33% of the adult population, could then buy homes, which would revitalize the housing and real estate markets. Others could use the money for college expenses, new cars, new boats, shopping sprees, or reinvestment back into those same financial markets that created the need for the bailout.

By all means, the Federal Government should consider foreclosure relief for the average American who has suffered the most through the ravages of a government that favored no regulation, no controls, and no accountability for the wealthy. The $700,000,000,000 bailout package is taxpayer money that may or may not be recapped by an ultimate sale of the bad debts being assumed. By offering mortgage relief to those facing foreclosure, the family man, the cornerstone of the American culture is able to benefit, not just the wealthy.

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