People have been dealing with increased unemployment and rising prices for a while. Now, due to subprime lending practices people are starting to lose their homes and life savings. The banks are also going belly up now because of an unregulated environment where they were allowed to greedily overextend their lending resources. Anyway, the real victims are the people of this country who will have difficulty getting a loan and those who are losing their homes. As Barack Obama has said, this is the final judgement on the era of deregulation. In the recent Presidential debate, John McCain made a vague suggestion that the government buy everyone a house. I have a different suggestion that I hope makes more sense.
Certainly we need regulation of the financial markets going forward, but more is needed to help get us through the immediate crisis. We need to free up the credit markets and lend a hand on main street. However, we can't just give away taxpayer money and suspend foreclosures/evictions. Instead, I believe that the government should do two things:
1. As a penalty to the banks and financial institutions who created the crisis, rewrite the interest rates on existing subprime loans with a modest cap of 7% or so.
2. Offer homeowners with endangered subprime mortgage accounts an option for the government to temporarily take over their interest payments. The payments would go into an escrow account (instead of to the banks). The government should probably also charge the banks a small fee for maintaining each escrow account. Any homeowner who takes advantage of this program would get a major break on monthly expenses, but would agree to a government-held lien on the property. The government lien would remain in place until the house is sold. Banks could borrow against the escrow account at preferred rates the same way we can borrow against our mortgages. Proceeds from the loans to financial institutions could be used to help stimulate the economy. The banks would eventually collect the interest out of an escrow account when the mortgage principal has been completely paid off.
If implemented carefully, this plan will lighten the load on main street considerably while providing a much-deserved slap on the wrist to the institutions who engaged in subprime lending. Importantly, this plan is not a giveaway of taxpayer money in any way. The government-held lien on the property would not be exercised unless the home was sold or there was a default on the payment of principal. I believe that the government should also make it possible in certain circumstances for homeowners to transfer the lien to a new home if they have to move and cannot satisfy the lien with proceeds from the sale.
So why is she still in the race? Most people are saying that she wants to negotiate the VP spot. I just read some of the financial details regarding the endgame for Clinton.
Clinton Deadline Looms for Recouping $11 Million Personal Loan (please read)
Is it really possible that so much is hanging in the balance because of a paltry $11 million of Clinton's personal fortune. Heck, we can raise that kind of money in less than a week! Nobody wants the Obama campaign to have to ask us for the money. I propose that we step up and create a grassroots escrow account to hold money for retiring Clinton's debt. If Clinton does not bow out gracefully and take the money by some deadline that we set (May 26?), funds revert to the Obama general election campaign as individual contributions. Honestly, I think that there are enough people out there who want to see this thing end. Do you think we could raise the money as fast as we can get the word out. Call it "Democracts for Constructive Campaigning". How would the Clinton supporters react to this? Would it just add fuel to the fire, or would it help to heal the party?
I have been following the discussion about seating Florida and Michigan delegates. Seating the delegates from these states will not only reverse the penalty against them, it will greatly reward these two states for breaking the rules. As such, I would expect to hear a really good reason behind the argument to seat the delegates. After sifting through a bunch of fancy political spin, I can only find two substantive justifications given in favor of this move.
1. The desire to use the delegates from these states to help determine a clear winner prior to the convention in August.
Given Barack's current delegate lead, the only way to accomplish the above goal would be for Barack to win the primaries in both states. If Hillary were to win and seat those delegates, the result would be an even closer delegate situation in August. A victory by Hillary would actually undermine the stated goal, yet the loudest voices are calling to seat the delegates based upon Hillary's prior wins.
2. The desire to keep citizens in these states from feeling disenfranchised.
These states broke the rules and were punished by the DNC. Other than the fact that the delegate race is tighter than expected, I fail to see what else has significantly changed since the DNC handed down the penalty in the first place. I can only imagine that the voters in these states who stayed home as a result of the penalty will be the ones feeling disenfranchised if the penalty is rescinded.
In summary, changing the rules at this stage to appease one group of people in those states will make the DNC look weak for not sticking to its guns and will simply cause a different (possibly larger) set of people to be offended. This move will be divisive and will only benefit the Republican party. The DNC should be doing what it can to energize the party, not to divide it. The penalty imposed on Florida and Michigan does not extend to the general election, so both Florida and Michigan will still have a voice in November when it really counts.
Barack Obama has said that he will call on us to sacrifice. I believe in his message and I believe in America. I am starting a new company and plan to do my manufacturing inside the USA. I know that I can get it done more cheaply outside the country, but that doesn't matter to me any more. Like Barack, I am a Christian and I believe that we have to watch out for each other as much as we watch out for ourselves. I also believe in the credo "do well by doing good".
If you are interested:
LINK: My new company website
LINK: My other blog
