Government bailout is a joke

Well they finally passed the bailout for Wall Street today. Now I was in support of the original bailout. It would have given money to buy bad loans and help out banks which would have helped them stay off bankruptcy. It would have helped stabilized the housing market and also the stock market. But I am very disappointed in the members of congress that changed their votes.
They lied to the public and told us that they would not support it because it put too much on the taxpayers and they wanted to stand up for us. Now it turns out it was just their way of blackmailing the country and taxpayers for more money. As if the 700 billion wasn’t enough they held out for an additional 150 billion dollars bringing the total to 850 billion or 21% more. They didn’t care about us they just wanted more money from us so now the bailout that they thought was unfair to us will cost us all more.
They tacked on 150 billion of special interest pork barrels. That is downright dishonest and should be illegal. I feel all those that had voted no and now changed their vote betrayed our trust and should be voted out of office. I think all elected officials should be replaced with someone who cares about the people who elect them.
Now some states are crying to the federal government for help making their bills. It now seems that with the down turn they are now facing budget shortfalls. They feel the federal government should bail them out to at tax payer expense. I don’t know about the rest of you but as gas has gone up I have made cuts in other places where I spend money. I think that if states can do this we as tax payers should be able to tell the government we want a bail out too. Maybe they can suspend all personal federal tax till this problem is solved. I know that will never happen but just shows how stupid it sounds. It is time that state, city, county and even the federal government start cutting their spending and lives within their means like the rest of us. It is time they step up and make cuts in spending waste.

Mortgage crises and what I would do to fix it.

With all the talk of the mortgage crises and what to do I have given it some thought. First you need to see the big picture and not just look at the 700 billion in tax money spent. This problem affects every aspect of the economy and country. Now remember I do not know all the facts but this is my idea. Banks are struggling under loans the people can no longer make the payments on. The people with those loans are falling behind because they now have to start paying principle on the loan that up to now was just interest. Banks have to write off loans and take huge losses. Now the blame goes all the way around from people who borrowed more than they should have, to the mortgage brokers that sold loans they knew were too risky, to banks that loaned to full value of the property so there was no equity in the property if the value went down.
I agree that the banks should not get off completely free. I propose that the government buy the bad loans from the banks and for this they be assessed a special tax on all profits for the next 20 years that starts at 20% and reduces 1% each year for 20 years till it disappears. This is only on their profits and would go into the fund that bought the loans to hopefully cover any losses the government might take on the loans.
Next sense the government sets interest rates they could reduce the rates on the loans they buy to 3%. The people would continue to make the same payments they were when they took out the loan. Now if you have a $250,000 interest only loan at 5%your payment would be $1042.00 a month. Now if your reduce the interest to 3% and they make the same payment of $1042 they would pay the loan off in 30.5 years which would allow the government to make 3% on the money they borrowed from the tax payers. The people with the loans would see their interest rates drop so they would get less of a tax write off. Again on a $250,000 loan their interest payment would drop from $12,500 a year to $8,300 a year so they would pay income tax on that extra $42,200 a year. If the average tax payer pays 15% federal tax this would mean an extra $630 dollars a year.
Now the 3% the government collects on the loans should cover any costs they incur for managing the loans as all they have to do is process the payments so there shouldn’t be a lot of labor involved and should be a little extra. The government would also collect the extra federal tax from the home owners and the special taxes on companies for 20 years. Also sense they will not be issuing any new loans the money should be paid back over the next 31 years give or take a couple years.
This would get the banks back on sound footing and stabilized the housing market because home would not be foreclosed on and homeowners would not have to sell their homes for whatever they can get to get out from under a loan that goes up to where they cannot afford it. This would also cut the supply of houses on the market which would stop housing prices from falling. Falling housing prices cause a big problems for states, counties and cities which are seeing their budgets shrink as they collect less tax dollars so they will not have to raise property tax to cover falling tax revenue.
This brings us full circle. Everyone has a part in fixing the problem and we can work together. Now this is a pretty simple plan and again I don’t portend to know all the information and there may be more to it then what I have here but it would be a go start.