Common Sense Approach to the Bailout

[texastoast]

One of my relatives sent me this. I pretty much like the ideas except for the capital gains tax, and even there, I might be grudgingly okay if it were modified impose the tax at certain figures. Also, it would have to have some punitive measures for the perps and guaranteed oversight. Do you think this is worth consideration?

Because this fight is not over yet. This stupid mess does have to be addressed, but I'm so not sure that including terms extending tax breaks for motor-sports racing tracks, makers of wooden arrows for children, and the rum excise tax for Puerto Rico and the Virgin Islands is really necessary when there is no firm "end-of-the-golden-parachute-era" provision.


What do you think?


Link

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 threestep 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.

[Oregone]

1. "Remove the capital gains tax completely"

Id rather starve. Wait, I would anyway.

[texastoast]

3. Yes, but even I

would make some concession to help out the "credit market." I wouldn't like it, though.

[Oregone]

7. You would starve regardless

The investor class would have less need of such peons, whose virtual slave labor was taxed. Kiss your ass goodbye.

Fuck concessions. The mess was started from a long series of "concessions".

[jtrockville]

2. I'd replace #3

with a .25% tax on stock transactions.

Otherwise, I like it very much!

[texastoast]

4. I really like that fee per transaction

Someone on the board discussed that it could set aside to fund the next bailout.

[lapfog_1]

5. You do realize that this is most of what the ultra right repukes in the house

offered up as a replacement program, right?

Remove cap gains? Talk about rewarding the upper class! Obama wants to raise cap gains to something close to reasonable, like 23%.

[texastoast]

6. Right.

And like I said, that's a sticking point with me, but a SOMEWHAT negotiable one within reason. My big deal is punitive measures, no golden parachutes, more insurance, and real help for the folks that were "victims" of predatory lending. Taking the mortgages back down to 6% fixed would help a bunch of folks.

[wtmusic]

8. Mark to market is anything but "artificially" marking down value

It's assessing at current market value. Haven't we had enough of bold claims about what real estate is "really" worth?

[texastoast]

9. I have a little trouble with this one as well

I think the originators of the loan should bear the responsibility on this one, but I don't know how you would get it back in their laps since it has been repackaged so many times. Sounds like a lot of red tape and expense. But those perps need to pay. If it is true that it would stabilize, how long would it do that based on the fact the loan was based on an inflated value? How does that work?

"If it is marked to market, for accounting purposes it is assigned the value that it would fetch in the open market currently."