- Posted September 24, 2008 by
This iReport is part of an assignment:
How would I spend $700 billion? EASY!
1. Without some stabilizing influences, the mortgage market will continue to destabilize. First, I would spend about $50 million to set up a series of courts to mediate the terms of those toxic mortgages. The same person who is looking at foreclosure when the ARM is at 12%, can afford to keep his home at 5%. By reducing the principle and interest on the loans of the 9.2% of us who are in danger of losing our homes, the market will continue to crash and burn.
2. Free: Change the bankruptcy laws back to the same as they were before the Bush bankruptcy overhaul. The week after they were changed, I received about 50 invitations to get credit cards, some with HUGE credit limits. They all had teaser rates from 0% to 2.9% to get people to take them. That says volumes about how the new bankruptcy laws made the banking industry much less afraid of default on even unsecured loans.
3. Regulate: spend $100 million to set up a new regulatory agency to oversee the purchases and sales of derivitives, such as credit default swaps, stock options, and other financial instruments that are currently totally unregulated.
4. Regulate, again: Make some new rules that govern the way that properties are appraised, so that there aren't a lot of $100,000 houses that appraise for $1 million, and the bank ends up stuck with an $800,000 loan that will never be paid. Cost: Free.
5. Regulate, part 3: Credit card debt should be tightly regulated. There are so many systemic abuses that it's unbelievable.
6. New regulations and guarantees for money markets. Cost: it would be an insurance, like banks pay. It should make a profit, to pay for the other two programs above that would cost money to administer.
7. Instead of making that STUPID reverse auction of thousands of interlinked securities based on thousands of loans, set up individual auctions for each of the individual mortgages. That way, individual investors, small businesses, investment firms, big businesses and sometimes even a group of the mortgagee's friends who want to help, will bid against the government for each of those mortgages. The government will end up with only a few mortgages instead of all of them. The ones it gets will be the real turkeys, but it will reduce the bill from $700 billion to about $150 billion.
8. Since the new buyers will have less invested in the mortgages than the original holders of the loans, they will often be more willing to work with the buyers to actually make them pay off, instead of pulling the trigger on a foreclosure at the first sign of trouble.
9. New rules to help the homeowners: It isn't in anybody's best interest for the mortgagees to be foreclosed on and the banks to sell those at 50 cents on the dollar. If they become homeless, everybody loses. If a 3 month breather on payments would stave off foreclosure, the lost profits can always be added to the end of the loan.
10. The banking industry has total debt of almost $16 TRILLION dollars that we know of, and their books are so riddled with Credit Default Swaps and various derivatives that we really don't know how deep in debt they are. After acquiring Bear Stearns, JP Morgan had 77 TRILLION in derivatives exposure. If it fails, it will take the entire country down with it. At least 3 of the top 6 are not salvageable. All we can do is keep throwing money at them; just let WAMU, Citi and Wachovia make their own ways; if they fail, they fail.
11. Buy GM at its current stock price and turn it into a nationalized company that has two functions: produce energy-efficient automobiles and do research toward making fuel cell, electrical or other alternative energy cars. Cost: $15 billion
12. Use $50 billion to begin Obama's health care plan; unhealthy workers are a HUGE drain on the system.
13. That CRAP about "Too big to fail" that was caused by the Bush Deregulation. Monopolies aren't free enterprise. They are the bane of its existence. The solution: A new FAIR PLAY And National Security Regulation: NO business may have sales of over 10% of any industry. This should go even further in the banking and insurance industries: No bank or insurer may control over 1% of the total system of the U.S., as defined by either assets, customers or deposits. Once the monopolies are broken up, a lot of industries will suddenly see lower costs and more innovation.
14. LOAN the short term money markets and businesses with AAA credit ratings up to $100 billion for up to 90 days while the three big banks either fail or sell themselves to other banks. NO BAILOUT FOR THEIR STUPIDITY. Once that money is back in the fund:
15. Instead of spending the remaining $485 billion to prop up the failures, use it to start building roads, rebuild the electrical grid, build wind and solar energy plants, build rapid rail systems to haul freight cross-country, build government-funded cell phone towers capable of broadcasting high-speed internet and cable to the entire country, then lease them to any new phone company that wants to compete with ATT and Verizon, basically to BUILD anything that keeps money in the US, creates American jobs, eliminates monopolies and duopolies, and makes us less dependent on oil and makes our people and businesses more competitive in the future.