Bailout “Plan B” – Three Steps That Won’t Cost Taxpayers A Dime

Here are my first three items for inclusion in any “Bailout” package – I believe they are the first 3 things that Congress should do – things that will stop us from continuing down the same road that got us here in the first place. 

1) Suspend the operation of the Community Reinvestment Act (CRA). The Act that fostered the development of the NINJA and LIAR Loans. No more NINJA or LIAR Loans.

2). Remove the Boston Federal Reserve Manual from use. Reverse the changes made in mortgage  underwriting standards by this Manual. This is the manual that was used to coerce Banks into making the worst of the sub-prime loans.

3). Implement the proposed 2003-2004 Accounting and Oversight Provisions for Fannie & Freddie that were blocked. Are there Congresspeople who would stand up today and say – “There is no problem with Fannie or Freddie” ?

These suggestions do not require an outlay of taxpayor cash.

Lets correct the problem before we try to clean up the mess.

The following is Dave Ramsey’s Common Sense Fix for the Financial Crisis. Mr. Ramsey is a Nationally Syndicated Radio Show Host & Fox Business Channel Host. Watch his show at 8 PM (EST) on the Fox Business Channel (Not the FOX NEWS CHANNEL). The Bailout will be the topic of discussion tonight.

DAVE RAMSEYS COMMON SENSE FIX

Years of bad decisions and stupid mistakes have created an economic nightmare in this country, but $700 billion in new debt is not the answer.

As a tax-paying American citizen, I will not support any congressperson who votes to implement such a policy. Instead, I submit the following three steps:

Common Sense Plan.

I. INSURANCE

A. Insure the subprime bonds/mortgages with an underlying FHA-type insurance. Government-insured and backed loans would have an instant market all over the world, creating immediate and needed liquidity.

B. In order for a company to accept the government-backed insurance, they must do two things:

1. Rewrite any mortgage that is more than three months delinquent to a 6% fixed-rate mortgage.

a. Roll all back payments with no late fees or legal costs into the balance. This brings homeowners current and allows them a chance to keep their homes.

b. Cancel all prepayment penalties to encourage refinancing or the sale of the property to pay off the bad loan. In the event of foreclosure or short sale, the borrower will not be held liable for any deficit balance. FHA does this now, and that encourages mortgage companies to go the extra mile while working with the borrower—again limiting foreclosures and ruined lives.

2. Cancel ALL golden parachutes of EXISTING and FUTURE CEOs and executive team members as long as the company holds these government-insured bonds/mortgages. This keeps underperforming executives from being paid when they don’t do their jobs.

C. This backstop will cost less than $50 billion—a small fraction of the current proposal.

II. MARK TO MARKET

A. Remove mark to market accounting rules for two years on only subprime Tier III bonds/mortgages. This keeps companies from being forced to artificially mark down bonds/mortgages below the value of the underlying mortgages and real estate.

B. This move creates patience in the market and has an immediate stabilizing effect on failing and ailing banks—and it costs the taxpayer nothing.

III. CAPITAL GAINS TAX

A. Remove the capital gains tax completely. Investors will flood the real estate and stock market in search of tax-free profits, creating tremendous—and immediate—liquidity in the markets. Again, this costs the taxpayer nothing.

B. This move will be seen as a lightning rod politically because many will say it is helping the rich. The truth is the rich will benefit, but it will be their money that stimulates the economy.

This will enable all Americans to have more stable jobs and retirement investments that go up instead of down.

This is not a time for envy, and it’s not a time for politics. It’s time for all of us, as Americans, to stand up, speak out, and fix this mess.

http://www.daveramsey.com/common_sense_fix.txt

Read Ramsey’s Article Here: http://www.daveramsey.com/etc/fed_bailout/3_steps_to_change_the_nations_future_10928.htmlc?ictid=sptlt

TELL WASHINGTON WE WANT A BETTER DEAL – NOT THE OLD DEAL WITH A NEW NAME.  

 

The following Articles describe the role of “political ideology” in the Financial Crisis – How Politics fueled the crisis:

Professor Stan Liebowitz: The Real Scandal – http://www.nypost.com/seven/02052008/postopinion/opedcolumnists/the_real_scandal_243911.htm?page=0

Professor Thomas J DiLorenzo: The CRA Scam and its Defenders: http://www.mises.org/story/2963

John R Lott, Jr : Analysis – Reckless Mortgages Brought Financial Market To Its Knees http://www.foxnews.com/story/0,2933,424945,00.html

COMMITTEE TESTIMONY – HOW THE REGULATION REFORM OF FANNIE AND FREDDIE WAS BLOCKED

 

  

The Common Sense Fix To The Financial Crisis – By Dave Ramsey

Below you can read Dave Ramsey’s Common Sense Fix for the Financial Crisis. Mr. Ramsey is a Nationally Syndicated Radio Show Host & Fox Business Channel Host. Watch his show at 8 PM (EST) on the Fox Business Channel (Not the FOX NEWS CHANNEL). The Bailout will be the topic of discussion tonight.

I like some of Ramsey’s suggestions, however, I’d preface any plan for resolution with the prior passsage of the Fannie Mae and Freddie Mac reform measures of 2004. Before we start to clean up this mess, we should make sure it won’t happen again. Before you start to bail out the boat, you should plug the hole and stop the water from coming in. 

I’m urging everyone to add the following to Mr Ramsey’s “fix”:

1) Suspend the operation of the Community Reinvestment Act (CRA) the Act that fostered the development of the NINJA and LIAR Loans.No more NINJA or LIAR Loans.

2). Remove the Boston Federal Reserve Manual from use. Reverse the changes made in mortgage  underwriting standards by this Manual. This is the manual that was used to coerce Banks into making the worst of the sub-prime loans.

3). Implement the proposed 2003-2004 Accounting and Oversight Provisions for Fannie & Freddie that were blocked. Are there Congresspeople who would stand up today and say – “There is no problem with Fannie or Freddie” ? 

These suggestions do not require an outlay of taxpayor cash.

Lets correct the problem before we try to clean up the mess.

 

DAVE RAMSEYS COMMON SENSE FIX

Years of bad decisions and stupid mistakes have created an economic nightmare in this country, but $700 billion in new debt is not the answer.

As a tax-paying American citizen, I will not support any congressperson who votes to implement such a policy. Instead, I submit the following three steps:

Common Sense Plan.

I. INSURANCE

A. Insure the subprime bonds/mortgages with an underlying FHA-type insurance. Government-insured and backed loans would have an instant market all over the world, creating immediate and needed liquidity.

B. In order for a company to accept the government-backed insurance, they must do two things:

1. Rewrite any mortgage that is more than three months delinquent to a 6% fixed-rate mortgage.

a. Roll all back payments with no late fees or legal costs into the balance. This brings homeowners current and allows them a chance to keep their homes.

b. Cancel all prepayment penalties to encourage refinancing or the sale of the property to pay off the bad loan. In the event of foreclosure or short sale, the borrower will not be held liable for any deficit balance. FHA does this now, and that encourages mortgage companies to go the extra mile while working with the borrower—again limiting foreclosures and ruined lives.

2. Cancel ALL golden parachutes of EXISTING and FUTURE CEOs and executive team members as long as the company holds these government-insured bonds/mortgages. This keeps underperforming executives from being paid when they don’t do their jobs.

C. This backstop will cost less than $50 billion—a small fraction of the current proposal.

II. MARK TO MARKET

A. Remove mark to market accounting rules for two years on only subprime Tier III bonds/mortgages. This keeps companies from being forced to artificially mark down bonds/mortgages below the value of the underlying mortgages and real estate.

B. This move creates patience in the market and has an immediate stabilizing effect on failing and ailing banks—and it costs the taxpayer nothing.

III. CAPITAL GAINS TAX

A. Remove the capital gains tax completely. Investors will flood the real estate and stock market in search of tax-free profits, creating tremendous—and immediate—liquidity in the markets. Again, this costs the taxpayer nothing.

B. This move will be seen as a lightning rod politically because many will say it is helping the rich. The truth is the rich will benefit, but it will be their money that stimulates the economy.

This will enable all Americans to have more stable jobs and retirement investments that go up instead of down.

This is not a time for envy, and it’s not a time for politics. It’s time for all of us, as Americans, to stand up, speak out, and fix this mess.

http://www.daveramsey.com/common_sense_fix.txt

Read Ramsey’s Article Here: http://www.daveramsey.com/etc/fed_bailout/3_steps_to_change_the_nations_future_10928.htmlc?ictid=sptlt

WATCH THE ACTUAL COMMITTEE TESTIMONY – HOW THE REFORM REGULATION OF FANNIE AND FREDDIE WAS BLOCKED

WATCH THE VIDEO HERE:  http://www.youtube.com/watch?v=_MGT_cSi7Rs&eurl=http://gatewaypundit.blogspot.com/2008/09/devastating-dems-refuse-to-reform.html

Shocking Video Proof – Bush/McCain Deregulation Is To Blame

The following Articles describe the role of “political ideology” in the Financial Crisis – How Politics fueled the crisis:

Professor Stan Liebowitz: The Real Scandal – http://www.nypost.com/seven/02052008/postopinion/opedcolumnists/the_real_scandal_243911.htm?page=0

Professor Thomas J DiLorenzo: The CRA Scam and its Defenders: http://www.mises.org/story/2963

John R Lott, Jr : Analysis – Reckless Mortgages Brought Financial Market To Its Knees http://www.foxnews.com/story/0,2933,424945,00.html

BUSH/McCAIN – No, I didn’t see them on the Video either!

FAMOUS CSPAN VIDEOS: 2004 Hearings To Reform Fannie & Freddie – Watch Representatives Frank, Waters, Meeks, Davis & Clay Defend Fannie, Freddie & Raines

WATCH THE ACTUAL COMMITTEE TESTIMONY – WHY REGULATION REFORM FOR FANNIE AND FREDDIE WAS BLOCKED

WATCH THE VIDEO HERE:  

Did you hear the hatred when it was suggested that the GSE’s (Fannie & Freddie are the GSEs) were making horrible loans and it needed to stop!  

How did the reform get blocked ?  You need 60 Votes to pass a law in the Senate – Democrat Senator Christopher Dodd blocked the reform of Fannie & Freddie that could have prevented the Crisis.

The following Articles describe the role of “political ideology” in the Financial Crisis – How Politics fueled the crisis:

Professor Stan Liebowitz: The Real Scandal – http://www.nypost.com/seven/02052008/postopinion/opedcolumnists/the_real_scandal_243911.htm?page=0

Professor Thomas J DiLorenzo: The CRA Scam and its Defenders: http://www.mises.org/story/2963

John R Lott, Jr : Analysis – Reckless Mortgages Brought Financial Market To Its Knees http://www.foxnews.com/story/0,2933,424945,00.html

Obama’s Irrelevant FDIC Suggestion – “and the price of tea in China is?”

Obama Panders To The Press – No Bailout Solutions Offered – His Lone Suggestion is Irrelevant

Barack’s solution to the Bailout impasse – Lets have the Federal Reserve increase the amount of money insured from $100,000 to $250,000 in any one account. Barack this is meant to help the “middle class”? 

Barack, of course you know this is just more spin – By the way your suggestion isn’t new, it was first suggested 5 years ago, but it didn’t pass because Democrats said it would only help “Rich Republicans”.

I’m all for an increase in the amount insured in a single  FDIC account – SO IS EVERYONE ELSE. 

What would Barack’s suggested change do to help the current problem? – nothing – and Barack – you sly thing you – you already know that.

What do we do now? – I split the $250,000 up into 3 different accounts at three different banks – so that all of the money is insured – everyone does this. Barack – with that Harvard education of yours and all that “book deal money” you know that too – if you don’t you sure as hell don’t belong in the White House. All your suggested change does is make it more convenient for me to do my banking. I can simply keep my money in one account rather than 3.  

How does your suggestion help solve the Banking or Finance Crisis – It doesn’t, and Barack, you already know that this suggestion will do nothing to resolve the issues. Instead of putting that icredible intellect they keep talking about to use – you are just playing politics and mouthing sound bites.

Your solution does nothing about the “bad debt” the banks hold from the bogus mortgage loans that you support. It does nothing to prevent a repeat of this crisis. YOUR SUGGESTION IS SIMPLY IRRELEVANT.

ADDITIONAL ARTICLE: Bill Isaac’s, Former FDIC Chairman expalins how the FDIC Insurance Fund is an Accounting Myth – How this proposal is a tax increase in disguise. https://mcauleysworld.wordpress.com/2008/10/02/fdic-deposit-increase-just-another-tax-increase-says-bill-isaac-former-fdic-chairman/