CL: We are very similar in thinking (and families - I have two sons). And I don't disagree with what you wrote. The problem is that Monday showed that the failure of the banks/investment companies has to happen in a controlled fashion. It is the difference between using a scalpel to open the wound or tearing it with a butterknife.

I agree that the rush has been part of the problem. Things should've been done sooner, and planned in advance. But like most things in Bush's administration, forethought and planning are things to be shunned. So, I'm for a partial (and temporary) loan to these companies to take off the credit burden for now - then using that leverage to either close them down (slowly) or force a buyout by another company.

Most of these mortgages need not be 'bad debt' if people have jobs to pay them off. Keeping jobs and businesses going right now will reduce our cost for these mortgages. I'm mad about it too, but being angry isn't the solution.

Wow...did they just erase all that was posted on this blog entry?

I agree 1percenter except that anger can be directed in a very positive way if channeled correctly.

Here is quick short term idea to calm things on a temp basis so that REAL diligent deliberations on a REAL plan (that might actually work) can take place.

From my friend TNT:

"1. A federal moratorium prohibiting the redemption of the toilet paper sold by Wall Street as investment grade debt for 90 days. An interest rate equal to the inflation rate at implementation of the plan can be applied to sovereigns and mutual fund holders to compensate for the liquidity freeze. This buys our leaders 90 days to find a way out of this mess with some degree of decorum and should soothe the frayed nerves of many of the larger holders of the trash foisted upon them. Cost: Roughly $26 billion.

2. Fire the rascals. Every single one. No severance. No lay off slip. No golden parachute. Void the employment contracts by executive order in the interest of national security and send the bums packing. This mess was created by selling the same asset over and over and over, last time I looked this was still fraud. Once the bums can no longer harm our national financial interests, let the FBI have a field day. Cost: I don't know. How much does it cost to write an executive order and send a Marshall out to plant a boot in some over dressed backside?

3. Do a forensic accounting of the evolution of the sub-prime waste paper. Track it from origination to current holder. Evaluate the collateral for each loan and roll back the value to the appraised value at origination. Cancel out any amount over appraisal. This is a loss to the originator (the bank) , call it a stupid tax. This revalues the underlying asset to a more realistic level. Cost: Maybe $100 million. Benefit: A real world assessment of the true depth of the problem, and a drastic reduction in the face value of the CDO's.

4. Evaluate each mortgage under realistic terms. If the mortgage was originated under NINJA terms and the mortgagee has not improved his circumstance enough to afford the debt without federal or state assistance, remove it from the CDO pool. This is a loss to the originator. Call it a stupid tax. Re-write the terms for the mortgages that are current to current market value on a fixed 30 year and give those people a chance. They've been busting their butt to have the dream and have done so in the face of a deliberate corporate attempt to make them fail. God bless them all. The NINJA loans that are 90 days or more behind, foreclose and liquidate. Cost: Maybe $50 billion, probably less. Benefit : Actual equity in the CDO pool, and a societal benefit of rewarding those that pull themselves up by the bootstraps and a putting on notice of those that suck at the teat of nanny government. The salad days of Uncle Sugar are over.

5. Congress, you now have 90 days. You have a handle on the scope of the problem. The problem has been reduced to a real world valuation. Now deal with it. It will not be easy, there are no quick fixes to a problem that was years in the making. But we are Americans, as a nation we have faced and defeated adversity every time we tried. Solving this one will take time, effort, thought, and yes, lots of money. In the end though, our economic pillars will be stronger, our noses will be more attuned to sniffing out bull from our corporate and regulatory leaders, and our standing as the global driver of the money boat will be restored."

Ive got to go make a few calls (again) to my reps to make sure they HEAR their constituents. Then Ive got to go be a bit productive at work in order to be better prepared to donate to the one federal agency that I was really hoping would become much more powerful over the next decade, the IRS.

It's time to make your voice heard, now more than ever. Our natons financial stability is in dire jeopardy because of fools who missmanaged our financial affairs for years. Banks an credit and mortgages etc all in ruin. If there ever was a time to start over again with a better system that time is now. Call your congressman, and constituents office. Email them , fax them, crawl down to thier office if you have to and tell them to bail on the bail out. It's a huge mistake and will only prolong the financial desintigration of America. Please get off your aster and Call your Government rep now. This problem has been going on for too long. It's the under lieing cause that needs fixing. The system is broken and pumping more of tax payers money into it won't fix it.

(Sent)
25 September 2008

Senator:

As a former Marine, American citizen, father, husband and homeowner, it is my hope this approach/proposal outlined below will be digested and considered for action.

I have prepared a draft proposal that will:
Flat line the mortgage industry
Reset credit and lending opportunities
Inject economic adrenalin unlike that seen in the history of the United States
Restore confidence in the American Dream

This plan is called “The Chuck Plan.”

Please bear with me and digest the information before discounting it. There is critical need for radical decision-making that will salvage hope. I will refrain from getting into golden parachute discussions, or who will make money because of the meltdown, and will instead attempt to briefly outline The Chuck Plan.

You know…this might just work.

This caveat: Homeownership is the backbone of the American Dream, and that backbone is broken. It must be reset with haste and with precision. A band aid of new rule-making is a mask for indecision and profound action. This therefore calls for unprecedented thinking and behavior.

1. All homeowners who have mortgages stop paying their mortgage and are given their properties outright and permanently, and under the protection of the Federal government. This in turn will allow the mortgage industry to flat line. All mortgage payments that would have been paid now become available for immediate reinvestment, bank deposits, purchases for goods and services and educational payments, job creation, and many others.

2. Once all the mortgages are cleared off the books, all the revenues will immediately shift and be leveraged back into the economy and the American consumer would be adding rocket fuel to the economy because of the profound availability of cash that would flow through the marketplace..

3. The banking industry will immediately have available substantial money that has been produced and can be shifted under “new” ethical, oversight for mortgage reconstruction.

Scenario: If on average each of the 100,000,000 homeowners in America were no longer required to make a mortgage payment of (on average) $4,000 per month, and they owned their properties now outright, free and clear, then that monthly $4,000 would immediately be placed in banking and put to work reinvigorating the economy through purchasing power. Banks would succeed immediately, investment in stock would succeed immediately, confidence would be at an all-time high. Homeowners would still be required to carry insurance and pay assessed value taxes on their now free and clear property. The mortgage industry would collapse, yes, but the reset would invigorate the economy to such substantial degree that the wave of optimism would be incalculable.

3a. The immediate availability of cash that would flood the market outside the now flat-lined mortgage industry would jump-start the economy because of the trillions in cash that would be available immediately. The banking industry would then be healthier than ever before historically.

3b. Rough estimates: Monthly, across the nation, there are $364 billion in mortgage payments that would be forgiven/existing homeownership be made permanent with no further mortgage payments due/purchases on the market would sky-rocket/foreclosures would be forgiven and cease/the American Dream would be attainable.

3c. Rough estimate (2): Annually, across the nation, $5 trillion would be immediately available for reinvestment; consumer purchasing power would be astronomically enhanced. The economy would flourish.

4. Once the mortgage industry has flat lined, it can be reset with appropriate, ethical oversight in constructing valid policies and procedures.

5. The Federal government would now have time to investigate the mortgage collapse in its professional entirety. In this interim (I propose 12 months to develop and launch a new mortgage system); all home sales will be frozen. This may cause some to complain, but at the end of 12 months, the mortgage industry would be reset.

There are many other extremely beneficial components of “The Chuck Plan.” This is just a start.

I ask you to consider this plan and would be available to discuss with you an immediate way ahead.

Who Loses:
1. The mortgage industry collapses, but the revenues made available because mortgage payments are forgiven for existing homeowners and the subsequent availability of cash propels the economy into new heights, and is represented by cash purchases, new job starts, educational payments, etc.
2. Mortgage companies who have been exercising ethical loan practices will unfortunately be part of the reset.

Who Wins:
1. The American homeowner
2. The American economy

Extreme situations require extreme action.

Regarding the $700 billion bailout option: NO.

You know…The Chuck Plan just might work.

Golden,

Unfortunately #1 would start WWar III....but I do at least find Chuck Baldwin to be a man of integrity.

CL

CL: Yeah - looks like all the posts got wiped.

How do we fire folks at these companies without taking them over?

Yes all the posts have disappeared.. so I"m reposting my comment...

So when, not if, they bail out their rich friends.. the debt will be paid with working americans money...will the credit and mortgage companies then in turn let our debt disappear? Of course not.. so we.. the american people will pay twice for this.

Golden, I'm not sure where you got your facts about the average mortgage payment in the US, but it's not $4,000 per month. It's closer to $1,700.

all the hogs are rushing toward the trough before it runs dry. even if the banks are infused with cash who in their right mind would go out and take out a car loan given the price of gas. or a loan for a home you may not be able to afford to heat this winter let alone make the house payment. given the instability of the market and very poor job projections our confidence has been eroded. so baiting us with the prospect of getting further into debt is a very, very, poor motivator.
we are in for a long period of recovery that will take years.

I've got a note to the congressmen that's simple enough that even they'll understand:

Vote yes on the bailout, and I'll be voting no to their reelection in November.

Now do your jobs and work on some legislation that protects the American people from this happening again, you crooked bums!!

I think the best idea so far is the one by Hillary to have the kind of agency they had in the Great Depression, a Home Lending Administration, etc. This would focus the government on bringing together the two parties in each foreclosure, the lender and the borrower to cut a deal. In this way, neither the lender nor the borrower, would have a complete loss as happens in a foreclosure. This would forego need for futher bailouts while forcing the lenders to take the loss they deserve while not crippling them or the rest of the economy.

Wow. The Chuck plan is communism defined. Sorry, but the people who should be crashing and burning are those who took out more mortgage than they could afford. Why in the world should they get to keep those homes when they can't live up to the agreements they signed? Why are we trying to bail out Wall Street? Investment = Risk. Risk means sometimes you lose, and you can't make it work any other way.

I DO intend to make my feelings heard -- on election day for the first time in my life I will use my vote to fire people. Of all the choices I will have on my baliot the ability to clean house/senate/whitehouse will be the driving item for me. These are all grown up people, most formally educated, some actuall intelligent but all seem to need to be reminded exactly who they work for, who pays the bills, and who thinks that they have failled badily in doing their jobs. Debates, townhall meetings, commentary -- none of that can errase actual events and this voter watched the vote last night - count for count - and paid high attention to who left early, who was just following the leader and who really carred about what their vote was about to do to this country. This is not a "recovery" and it is not a "bailout" -- it's the results of not doing the job in the first place.
I feel there are a lot of people out there just like me who will make it known on election day just exactly how we feel -- and who we think flunked out.

FEEDING THE BEAST
our leaders are acting out of panic and fear and injecting that into the public just like they did when they reacted to condi rice' mushroom cloud moment in the lead up to war.
pet projects were added to the senate bill at a time when we have millions of foreclosures, and unemployment is on the rise.

nancy pelosi on tv now saying that 'if we do not act now the american dream will evaporate' what rock does that woman live under.

It is hard to imagine 75% of our Senate voted to open the check book yet again without first providing a better accounting to their constituencies for the mess, particularly the $18 million bonus to the WaMu CEO for his 18 days of work(?), or the generous bonus packages granted Freddie Mac and Fannie Mae executives while the company was failing on their watch, or how the House Finance Committee (Barney Frank)failed to heed the Regulator warnings of pending doom at Fannie & Freddie.

In November, voters will have the opportunity to give pink slips to some House and Senate members like we on Main Street would have received if we had performed like those being bailed out.

I have a feeling there is more to this mess than we (on Main Street) are being told. Looks like a case of the wolves being sent to guard the hen house.

Aaron I agree.. we can't just blame the government for the mess we did to ourselves. Anytime anyone wants to multiply the amount of people in their state filing bankruptcy times 50 states..

And *nod* to the Investment = risk.. Wall Street is a gambling machine.. sometimes ya lose.

Yes they removed all the previous comments on this blog site. What a pity. The people were voting 100% against the foreign-bankers bailout.

The politicians want to ease the problem, and I am OK with the idea of using our taxes with some assurances attached. However, from what I am seeing attached to the bill, they are adding a bunch of pork barrel garbage to it that has no business being there, or will have no impact. Maybe the American citizens should just fire them all. WAKE UP POLITICIANS!!! Take care of the issue at hand.

People make good points here. People on Wall Street and the CEOs of these big companies usually draw down mad money. Along with the posibility of making big money goes the risk of losing big. Those who choose that lifestyle should not feel as if they are entitled to a safety net on the downside. That's part of the game they play.