World

Democrats want homeowner relief as part of bailout plan

by Tina Kells | September 22, 2008 at 03:09 pm

312 views | 12 Recommendations | 3 comments

The US government's corporate bailout plan will cost taxpayers hundreds of millions, if not trillions, of dollars, calling some Democrats to ask the obvious; will a similar aid plan be put in place for bankrupt homeowners?

If it were up to Democratic Senator Chris Dodd any government funded bailout plan would include provisions to help cash strapped homeowners keep their homes. But Sen. Dodd's proposal wouldn't end with mortgage debt; he would like to see the government buy back any bad assets, like credit card debt and defaulted car loans.

The proposal that Dodd has sent to Treasury Secretary Henry Paulson would let judges modify the mortgages of homeowners in bankruptcy to allow them to keep their homes.

It also would require that the government come up with “a systematic approach for preventing foreclosure” on the mortgages it acquires as part of the bailout. That would include the home loans held by Fannie Mae and Freddie Mac, the troubled mortgage giants now under the control of a government regulator.

Asked about Democrats’ demands, Treasury spokeswoman Brookly McLaughlin said, “There are lots of issues but the discussions we are having are good.”

Asked if the negotiations could slow down passage of the measure, she said, “We are confident that we can get a bill done this week.”

With the US economy poised on the edge of a Great Depression-like collapse, measures like those proposed by Sen. Dodd offer help to the taxpaying individual, not just to corporate entities.

The proposal highlights an important, all-be-it sorely ignored, aspect of the current financial crisis; the banking industry's gross mismanagement of activities and funds. The sub-prime mortgage disaster was just the beginning of the end, and banking officials should have seen it coming.

While the mortgage crisis was a looming reality, and it was clear a crash was coming, banking executives were being given six-figure bonuses. This seems illogical; aren't bonuses meant to be in recognition of a job well done? Wouldn't precipitating the worst market crash since the Great Depression signal that the banking world had done a miserable job?

While the bailout plan does address the issue of bonus payments and executive pay packages, it remains to be seen if taxpayer resources will be used to help debt burdened taxpayers. It will be interesting to see whether Sen. Dodd's "help the people" provision will be included in the final draft of the bailout package.

0 See all footage | View Slideshow

Share: email story | add to any | Digg | facebook | stumbleupon

recommend This comment thread is now closed

Karen Hatter

flagged this story as Good Stuff

at 05:34 on September 23rd, 2008

Tina Kells, good stuff.

Heritage

flagged this story as Good Stuff

at 07:55 on September 23rd, 2008

Tina Kells, I like this story. It's good stuff.

Homeowners/taxpayers should benefit directly from this massive bailout.

A better use of the money, says Michael Hudson, professor of economics at the University of Missouri, Kansas City, and an economic adviser to Rep. Dennis Kucinich, would be to “save these 4 million homeowners from defaulting and being kicked out of their houses. Now they’re going to be kicked out of the houses. The houses will be vacant. The cities are going to [lose] property taxes, they’re going to have to cut back local expenditures, local infrastructure. The economy is being sacrificed to pay the gamblers.”