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.



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.


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.


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.


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.

Read Ramsey’s Article Here:



7 Responses

  1. I just wanted to let people know that I support this and have already sent my letter promoting this fix to my Senators and Congresswoman.

  2. Yes, yes, yes. If there is somewhere we can sign, let us know. Thank you and Newt Gingrich for some common sense in a world gone mad! Keep up the good work, you are our voices.
    Respectfully, Dan & Cathy Meyers

  3. Even the Financial Accounting Standards Board’s couldn’t figure out how to deal with the mark-to-market accounting shortly after the Enron debacle. Even the Arthur Andersen accounting firm had problems with it which led to its failure too. Enron filed for bankruptcy 2001. The Financial Accounting Standards Board’s has had 7 years and they did nothing.

  4. It would seem removing mark to value on subprime mortgages would overstate the asset value of those mortgages and merely delays the inevitable markdown

  5. […] The $700+ Billion Bailout–Posner MUTH’S TRUTHS » Double, Double Bailout Trouble The Common Sense Fix To The Financial Crisis – By Dave Ramsey « Mcau.. Obsidian Wings: When Politics Fails The Washington Independent » Obama Demands Bailout in […]

  6. This Fix should be sent to every Senator and House of Representatives member in our government. We don’t
    need $700 Billion in U.S. Funds to straighten things out.
    This money will not be used for that, but will end up in the same pockets of all who corrupted the system to begin with.

  7. ECONOMIC RESCUE ALTERNATIVE PLAN built a complete solution from Dave’s Common Sense Fix.

    Please read it and come out swinging for it:

    Click to access RSC_Economic_Rescue_092908.pdf

    Highlights: Work-out not Bail-out
    Eliminates the Credit Crisis: Suspends Capital Gains Tax to immediately free up huge volumes of capital
    Eliminates the MBS drivers behind the Credit Crisis:
    · Requires Industry-funded Insurance for Mortgage-Backed Securities (MBS) that guarantees losses to attract Private MBS Buyers
    Eliminates the MBS drivers behind the Credit Crisis:
    · Requires Industry-funded Insurance for Mortgage-Backed Securities (MBS) that guarantees losses to attract Private MBS Buyers
    · Suspends Mark-to-Market Accounting that effectively froze MBS assets from being sold and multiplied capital requirements for Banks
    · Provides Loss Write-offs for MBS Sellers to price them at market and incur the losses needed to pull capital from their MBS assets now
    · Requires all future MBS to meet full regulatory requirements and provide complete, transparent documentation for assessment of risk and value
    Eliminates the Crisis Perpetrators behind Bad Mortgages and MBS Problems:
    · Privatizes Fannie and Freddie GSEs to eliminate the sources of the problem and prevent Congressional kick-back schemes
    · Refocuses the Fed from short-term economic growth that drove economic boom-and-busts, to long-term price stability that controls inflation and sustains the dollar
    · Prosecutes Corruption and Constrain Compensation for Industry-Executive Perpetrators


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