What Does Common Sense Say About The Bailout?

From everything I have been able to grasp in reading about the economic meltdown and bailout it seems pretty clear there is no painless way out of this mess. Obviously any kind of bailout is not fair to the taxpayers but who said life is fair. We have two choices: we can waste our energy resisting what is – a looming economic collapse – and rail against those who brought it about; or we can use our energy to find a solution that is as equitable as possible. Seems like a no-brainer.

The first thing needed by the people is truthful and detailed information as this deal is structured. Our representatives and the administration can meet behind closed doors to hammer things out, but before any vote is taken the details agreed upon must be made public and the people must be given the opportunity to express their agreement or opposition. Secrecy is one of the things that got us into this mess.

It certainly seems a good move to parcel out the money as needed rather than to just dump $700 billion in the pot all at once. It sounds like there is some agreement on this point, but we have been given very little in the way of details about how the outlay would be structured. We need to hear that.

It also seems prudent to have the price we pay individual institutions for their “stinky mortgages” determined by people who can balance the taxpayers interests with the cash flow that is needed to restart credit. That automatically eliminates anyone who is talking to financial services lobbyists. Lobbyists contributed hugely to the problems we have. Their job is to advance the interests of the company they work for. In this situation, those interests are important only in regard to how they will contribute to restarting the flow of credit. If we pay too little, it will not have the desired effect. If we pay too much, the company profits, the taxpayers lose.

The goal of this bailout is not to make a profit for financial services; it is to restart the economy. That is what the taxpayers should be willing to pay for. If a financial company is not willing to cooperate in that, then just eliminate them from the equation. Let them try to find money somewhere else. Or let them sit and hoard what cash they have. How long can a lending organization stay in business without lending? And if they go under – so be it. It is reminiscent of the knot heads in Galveston who recently refused to evacuate and then called 911 expecting others to risk their lives to save them.

There should not even be a question about the taxpayers having the opportunity to recoup some if not all of what they put in the pot; and if, due to an improving housing market, they should even make a profit, all the better. It is after all the taxpayer who is taking the risk. Perhaps this scenario would be more understandable to Wall Street if we stopped calling this a bailout and started calling it a taxpayer investment. People always expect a return on their investment, those making it and those with whom it is made. On the other hand, if they are just looking for a handout, forget it!

A solution for the problem of continuing foreclosures needs to be looked at by people who understand mortgages and can also think out of the box. It seems reasonable that it might take a new kind of mortgage structured in steps with the goal of initially stopping foreclosure by making payments affordable now, then increasing the payments as housing values increase perhaps with a cap at the property’s value at time of purchase. People who got in over their heads will have the possibility of keeping their homes but should not expect to profit at taxpayer’s expense.

And that statement about profiting at taxpayer’s expense goes for Wall Street executives as well. It goes without saying that golden parachutes should be a thing of the past.

Many of us ordinary folk have more common sense than our representatives and we are not influenced by lobbyists or worried about pleasing big donors. So we need to voice our opinions and contribute our ideas. It is after all our money, our economy, our jobs, that are at stake.