For a lack of a better way of putting this: Is there a way to bail out without using paulson plan?

[redirish28]

My wife has given up on almost ALL American news shows. She does like Keith and Rachel's shows but she makes it a point to watch BBC news on BBC America every morning.


She completely has mix feelings about a bail out plan. She doesn't like the Paulson plan with paulson having so much control BUT she feels that the government needs to step in somehow.


She thinks that NONE of the CEOs should get the Golden Paraches and believes that the CEOs money should be used as part of the bailout.

[dmallind]

1. Sure

Here's what I'd suggest - and Dems have the votes to pass this. Shrub may veto and Reps may fillibuster, but if they do it's political suicide for a generattion.

1) Reinstate Glass-Steagall.
2) Add more regulation severly restricting derivatives
3) Use the money to buy equity stake or options in these banks which will pay off when values go up, not just bad debt.
4) Freeze mortgages as is and refinance all above market rate to that level to people who (would normally) qualify.
5) End golden parachutes for failure (but do not limit income significantly - financial companies need the best managers they can get, but let's pay em for success not failure)
6) Limit foreclosures to bankruptcy courts based on ability to pay. So we are not subsidizing greedy buyers who stretched too far, substitute sales for foreclosures for these freeloaders - in other words force them to sell the house they could never afford, let the Fed make up the difference in selling price to principal balance, so neither greedt bank nor greedy buyers profit, but neither are destroyed.
7) Institute Fed control of inter-company banking interest rates. The fact that banks can't borrow hurts us all, but it's based on nothing more than lack of trust. Let the Fed supply the trust, but let them free up the funds too by law not by hope.

[redirish28]

2. My wife likes most of your ideas. She however know a couple of

people who where talked into borrowing money using that adjustable rate. In fact one couple had excellent FICA (?) scores in the 700s but their bank said that they had to do the adjustable rate. They bought a 4 bedroom home worth $150,000 between the both of them the take home salary after taxes is about $4,600. Their payment was a reasonable $950. Next thing they know they open a statement from the bank saying the loan was now $5,000 a month. How does that happen? Should they have to suffer?

[dmallind]

12. Well couple of answers

Frankly anecdotes can be found of all circumstances so it's not generally a good idea to set policy on them, but a couple like that would fall under the refinancing I would think. Obviously if a $150K loan is hitting $5K a month it's because of extremely high interest rates even outside normal ARM levels so they are surely getting hit with some punitive rate due to something outside the norm. ARMS generally only move a few percent.

If they still have good scores they can still refinance to fixed MUCH lower than that. If they missed a payment and are being gouged by penalty rates then the freeze/refi I suggest (but have neither the power - obviously - nor the expectation to make it happen) would cover them.

EssentiallY I would limit punitive measures to homeowners only to those who got NINJA farudulent loans to buy above their means, and even then would limit that to enforced sales not foreclosure by banks.

[annabanana]

4. I think we should arm the SEC. . . . n/t

[Mist]

7. These are good solid measures. But how much would it help if the Fed

has conrol of banking interest rates? The Fed is not exactly blameless or trustworthy in its current shape.

ON EDIT: Responding to post #1.

[dmallind]

9. Well this is an implied power in normal times anyway

In normal circumstances their rate setting drives the de facto norm for bank loans to each other anyway. It's only because the banks don't trust each other to pay these loans back that the rates and liquidity are artifically restrictive right now. The Fed could both guarantee loans (there has to be SOME bail out!) but also enforce normal interest rates that 99.9% of the time the banks would use anyway.

[RUMMYisFROSTED]

11. 8) Investigate, indict, imprison.

Main Street would enjoy some conspicuous perp walks right about now.

[annabanana]

3. I think that Kucinich has something

better.

[LynnTheDem]

5. Of course. Several safer, alternative plans have been suggested.

But George W. bUsh WANTSHISBILLPASSEDRIGHTNOWTERRATERRATERRAORWEALLDIETERRATERRA!!!

Take a deep breath.

Discuss bailout bills that will actually work, that can actually help solve the problems, that have acutal oversight.

THEN vote yes.

[adamuu]

6. Related Threads from today:

Should the DEMs Create a Bailout Bill
http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=132x7248155

The Congressional Democrats should now produce a purely Democratic bill from scratch
http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=132x7248155

Krugman is making GOOD SENSE on KO - Dems should write a bill they believe in...
http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=132x7249066

[sinkingfeeling]

8. Yes, there have been several plans put forth by renown economists.

[TwilightGardener]

10. Webb up on Senate floor now, I can't tell where he stands on it--he's a pretty populist guy.

http://www.c-span.org/watch/cs_cspan2_rm.asp?Cat=TV&Code=CS2

[HeraldSquare212]

13. I still don't understand why, if bad mortgages are the issue, we can't just give the money to the

homeowners. I realize there's all sorts of leveraging on that underlying debt by financial institutions and that that leveraging increases the amount of credit available, but I don't understand why securing the underlying obligations won't also support that leveraging. That, and making credit available for small and mid-size businesses seems to me to be a better way to proceed.

[PVnRT]

14. Sanders' plan is floating around, along with some others

At any rate, the Democrats need to get theirs out there before the GOP. I think that's imperative.