Let’s stay on the subject of our economy because what’s going on is so historic and may influence our lives to such an extent; we need to explore it and its ramifications very closely.
On the surface, the plan is simple; spend billions if not trillions of taxpayer money to buy up all bad mortgage based debt from all financial institutions that hold it. Once freed from these illiquid assets, the financial institutions can go on about their usual business – NOT! New regulations have to be put in place to prevent this nonsense from ever happening again.
It is ironic that just recently, the Republicans were complaining about the over-regulation of the finance industry; Democrats did too. After the Great Depression, regulations like the Glass Steagall Act (1933) which created the FDIC (Federal Deposit Insurance Corporation) and separated deposit banks from investment banks with tight rules, came into being. Through the years, nearly all those depression era regulations have been repealed. Guess what – its time to re-regulate.
A question that I know people are asking is how come we, the taxpayers, are bailing out all those rich morons that screwed up royal and caused all of us this misery and they are being forgiven with no penalties or pay-back at all?
These rich institutions are being bailed out but not the people who have been or are being foreclosed on? Where is the fairness?
People in power are well aware that they cannot just please “Wall Street”, they have to please “Main Street” or they all will be thrown out on their asses so believe me, they are thinking of the little guy also.
One interesting point being argued is to put tight salary limits on executives of companies being bailed out – I can already hear the screeming.
During the Great Depression, Roosevelt created the Home Owners’ Loan Corporation which bought up distressed mortgages and thus prevented foreclosures. The corporation then would negotiate a re-payment plan with the mortgagee that was realistic. In 1951 when the corporation finally closed, 80% of all the mortgages it bought were repaid in full and the government actually made a profit.
In our current situation, things are not so cut and dry. Mortgages were originated by brokers who sold them to financial institutions who bundled them with other mortgages and re-sold them as securities, etc, etc………
I have to see how we the people are going to benefit from all this…
On the surface, the plan is simple; spend billions if not trillions of taxpayer money to buy up all bad mortgage based debt from all financial institutions that hold it. Once freed from these illiquid assets, the financial institutions can go on about their usual business – NOT! New regulations have to be put in place to prevent this nonsense from ever happening again.
It is ironic that just recently, the Republicans were complaining about the over-regulation of the finance industry; Democrats did too. After the Great Depression, regulations like the Glass Steagall Act (1933) which created the FDIC (Federal Deposit Insurance Corporation) and separated deposit banks from investment banks with tight rules, came into being. Through the years, nearly all those depression era regulations have been repealed. Guess what – its time to re-regulate.
A question that I know people are asking is how come we, the taxpayers, are bailing out all those rich morons that screwed up royal and caused all of us this misery and they are being forgiven with no penalties or pay-back at all?
These rich institutions are being bailed out but not the people who have been or are being foreclosed on? Where is the fairness?
People in power are well aware that they cannot just please “Wall Street”, they have to please “Main Street” or they all will be thrown out on their asses so believe me, they are thinking of the little guy also.
One interesting point being argued is to put tight salary limits on executives of companies being bailed out – I can already hear the screeming.
During the Great Depression, Roosevelt created the Home Owners’ Loan Corporation which bought up distressed mortgages and thus prevented foreclosures. The corporation then would negotiate a re-payment plan with the mortgagee that was realistic. In 1951 when the corporation finally closed, 80% of all the mortgages it bought were repaid in full and the government actually made a profit.
In our current situation, things are not so cut and dry. Mortgages were originated by brokers who sold them to financial institutions who bundled them with other mortgages and re-sold them as securities, etc, etc………
I have to see how we the people are going to benefit from all this…
No comments:
Post a Comment