I really would like to see two rules implemented in the Administration's Homeowner Stability Initiative procedures, in addition to payments lowered to 31% of income.
First, no tax deductions for interest on bailed out mortgages. That would make the rest of us cover the sin twice.
Second, if and when a bailed out property gets sold for more than the mortgage principal, the "profit" gets taxed at 100%, until the incentives are paid back. Those incentives, of a thousand dollars here and there, are our tax dollars! They need to be paid back to the Treasury, not end up as "somebody's slick move".
The implementation rules must contain assurances that the $75 billion gets paid back by those who got bailed out, not by our children.
Mr. Geithner has several months for developing the implementation rules. The money comes out of TARP, which means he can do pretty much whatever he wants. Such rules should not be a problem for him, and it would be very reassuring, and FAIR, for those of us with the "responsible gene".
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