The Obama administration and Democratic congressional leaders said they are considering a number of options to help banks in the U.S. and to stabilize the economy.
But the question on many people's minds is whether they are considering nationalizing much of the banking system. The Obama team has avoided the word altogether, while House Speaker Nancy Pelosi indicated that there is an internal debate going on regarding nationalization.
Nationalizing banks so government burocrats run them is absolutely a disastrous idea.
The problem the banks face is that they own billions( maybe trillions) of dollars worth of mortgages. These may or may not be performing for the mean time.
They also own billions of dollars worth of assorted valueless securities connected in one way or another with mortgages.
Politicians need to solve the mortgage problem and the constipation of lending that the banks suffer from will be massively relieved.
In this great USA home ownership is a right that is far more economically important that the right to free health care or free education. Allowing this mortgage crisis to continue is economic suicide.
Let the Treasury issue as many new 30-yr bonds as necessary to buy all owner-occupied mortgages at face value and replace them with new 4% 30 yr mortgages based on payments not exceeding 30% of last reported Gross Income on tax return. Issue these via The Federal Reserve and or Freddie Mac/ Fannie Mae.
Hire an army of contract lawyers to write mortgage agreements that obligate willing homeowners to repay the difference between the old value of the mortgage and the new value at sale of their property.
And watch out for the rush to release homeowners from their bondage!
No comments:
Post a Comment