Tuesday, September 30, 2008

Dave Ramsey's Common Sense Plan

Do you think it is right for our government to spend our tax dollars to bail out bankers who made bad decisions? I don't! They knew what they were doing when they made these loans and we should not be the ones to save them from their consequences with our hard earned money. I am not an economist, but I do know that there has to be other ways to fix this "crisis". We are a Dave Ramsey family and recently Dave has spoken about his Common Sense Fix on air. I have posted it below for your convenience. There are three things that we can do to get this fix in place instead of the one that will cost you and me 700+billion dollars.
  1. Pray for our leaders. They are operating under a spirit of fear at this time and we know that fear is not a fruit of the Spirit!
  2. Send the plan below to your representatives and congressman.
  3. Tell others to do the same!

The 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 step 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.

1 comment:

Janet L said...

We don't do Dave Ramsey, but I totally agree with his principles. I think a huge problem in America is the lack of personal resposibility. We definitely need to be praying for our leaders and future leaders.