Do you think this is fair?
[text below of the email I just sent to my US Senator]
Dear Senator:
It is unfair to bailout the banks that made bad loans unless the country receives compensation similar to the AIG case — 11.35% interest and an 80% voting preferred stock interest in the firm and the right to replace the managers. Sauce for the goose is sauce for the gander.
Some in Congress may claim that if we bail out the banks, we also have to bailout the borrowers on these bad loans. That would also be unfair.
It would be unfair to everyone who doesn’t have such a loan. This includes every renter in Miami who couldn’t buy a house or wouldn’t lie to do so. It includes every senior citizen who owns her home free and clear. It includes every citizen in places where home prices never got out of hand and so their payments never became excessive. And it includes everyone who already lost that house to foreclosure.
In short, bailing out the home buyers would be unfair to the majority of Americans. Either our taxes or inflation would go up to pay for their mistakes.
And it wouldn’t even fix the housing markets. Housing markets won’t be fixed until prices come down enough that ordinary workers in places like Miami can afford to buy a house. That hasn’t happened yet and if America subsidizes all these over priced houses, it won’t happen for many more years.
Here’s what would be fair if politics says we have to bailout home buyers — every American gets the same treatment once in their lifetime. We cap the amount of the bailout at some figure, say 20% of the price of the house, and then every American gets the same benefit — the government pays 20% of the cost of them buying a house. [It would be like getting a free down payment.]
Somewhat obviously, they’d have to properly qualify for the remaining loan on the house and this would limit the size and cost they could afford. Senior citizens who own their home outright could trade their benefit for either a lifetime benefit paying 20% of their property taxes, insurance, and upkeep, or a cash payment equal to 20% of the tax assessor’s 2007 value on their property.
We need you to fight for fairness in this whole mess because it sure looks like America is about to reward only a select few for taking foolish risks.
thank you for your time today and for representing the interests of the majority of Americans, and Floridians, in this matter.
Best regards,
[MBA/CPA. I began working in banking in 1970 and have seen repeated real estate lending booms and busts. This may be the worst one of a long string of them, although I can't remember the one during the Great Depression.]
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