Alternatives to the Big Bailout

Posted by: Chris Palmeri on September 24, 2008

As Congress continues to debate the $700 billion bank bailout plan, I’m hearing much opposition to it from friends and other authorities. There are people like my friend Kim White, an entrepreneur who says she worked hard to save for her 20% down payment when she bought a house two years ago. She continues to work hard to pay it off and doesn’t like the idea that other folks, including Wall Street firms, get bailed out. Here’s what some other smart folks are saying:

The California Reinvestment Coalition, a non-profit representing low income families, suggests a six-month moratorium on foreclosures to allow families to remain in their homes while working with housing counseling agencies and loan servicers to negotiate affordable workout plans. The group also suggests reforming the Bankruptcy Code to allow judges to modify all home loans. They presently can modify second home loans.

Congressman Charles E. Schumer, opened an economic outlook hearing today saying he supports a bailout, but “let us be clear – Americans are furious. Even on Wall Street, $700 billion is a lot of money, and none of the thousands of money managers would invest that sum without appropriate due diligence. I think we must seriously consider putting this program in place in installments – so that we do not limit the Secretary’s ability to act as necessary, but are able to evaluate the effectiveness of these expenditures over time.”


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Another idea Schumer proposed is insurance fund modeled on the FDIC and paid for by the financial industry that can defray some of the long-term costs of the bailout plan. Schumer said he remained “puzzled by the resistance to equity being part of the process. It seems only fair that we reward taxpayers if, as we all hope, this plan succeeds.”

Kenneth T. Rosen Chairman, Fisher Center for Real Estate and Urban Economics at the University of California, Berkeley: “Whether or not Treasury purchases these securities, the only way to treat the mortgage problem is a massive loan modification at the consumer level. I propose an immediate 90-day moratorium on foreclosures to allow the modification plan to be put in place. Directly address the problem by the Treasury buying Preferred Stock at a high interest rate. (The high interest rate will encourage companies to refinance as soon as possible.) Suspend “Mark to Market Accounting” for illiquid but performing loans. This will break the death spiral of asset value mark downs that require companies to raise more capital as they report mark to market losses. Aggressively use Fannie Mae, Freddie Mac, and the Federal Housing Administration to return the capital flow to the residential mortgage and housing sector.”

And here’s voice in favor of the bailout from my friend Paul Schlosberg, a former securities firm president. “It took years to build up these abuses and it will take years to work them out. We have to stem the paranoia and just offer comfort that that system won’t melt down. If we fail, it will be a global failure. If you get panic overseas, then it’s a tidal wave. We have to get out a plan out that stops the bleeding. Then we’ll figure out if it needs to be changed later.”

Reader Comments

DreamT

September 24, 2008 3:47 PM

If the purpose of the bailout is to "just offer comfort" and "stem the paranoia", it turns out to be a rather expensive psychotherapy session, don't you think? One would think it best to address financial and regulatory issues rather than psychological ones.

tom fay

September 24, 2008 6:45 PM

THE TOM FAY RESCUE PLAN REQUIREMENTS:

• If an institution takes money or sells assets to the Plan, then no employee shall receive compensation greater than $400,000 per year including options.
• The Plan does not buy any Derivates or Credit Default Swaps.
• The Fed lower interest rates to 0%
• The Fed makes all needed funds available to banks for lending.
• All “off balance sheet” liabilities be prohibited for all public companies and must be immediately put on the balance sheet.
• All liabilities must be included on the balance sheet of all public companies
• Revenue from Derivates and Credit Default Swaps cannot be recognized until the liability is extinguished.
• All foreclosure on single family homes is put on hold for six months with no interest accruing on the loan.
• All institutions that are either regulated by the Federal Reserve or borrow from it shall pay back all $700 billion plus interest in the form of a surtax.

malcolm boynton

September 24, 2008 6:48 PM

This situation should have never have come to this. Number 1,The greedy bastards in the mortgage industry should never have been allowed to overqualify a lot of people in the first place. Number 2,PEOPLE!!! your house is not an ATM machine. If you need money for vacation,wedding,pool,big screen TV find another source,or god forbid,save for it. Don't be so stupid

Bob Reynolds

September 24, 2008 7:11 PM

I like this idea!

Memo to Uncle Sam: Small Business Needs Your Help, Too!
Eight years after the dotcom market collapsed and the shares of my company, NetCreations, plunged 90 percent in nine months, I thought I had finally found some solid ground. Armed with a diversified portfolio of real estate, muni bonds, hedge funds and private equity, I really thought that market meltdowns were a thing of the past.

Until Sept. 14, that is, when the government refused to rescue Lehman Brothers and the U.S. financial system went into a tailspin, sending the stock market on a heart-stopping roller coaster ride that made Six Flags‘ Kingda Ka look like a kiddie merry-go-round. A day later, the government shifted gears, throwing American International Group an $85 billion lifeline, guaranteeing the money market industry’s $3.4 trillion in deposits and rolling out a plan to take $700 billion worth of bad mortgages off the banking industry’s balance sheet.

Memo to Hank and Ben: The next time you guys decide to throw out the rule book and start running the economy out of your hip pocket, could you at least come in for a consulting session first? I know things are tight at the Fed these days, but $300 is a drop in the bucket compared with the trillions you’re going to spend before it’s all over.

If you guys really want to think outside the box, consider this: Why bail out the middleman when you could save billions of dollars by lending the money to businesses and consumers directly? After all, you guys have already nationalized the country’s mortgage lending business and forced Goldman Sachs and Morgan Stanley to become regulated banks.

Think about it: The way that banks have traditionally made their money is by borrowing cash from the government at wholesale prices, then retailing it to the public and making the spread.

Banks justify their profits by arguing that they’re taking a big risk. If the borrower defaults, the banks are the ones stuck holding the bag. But if the government is going to step in and bail out the banking industry every time it makes a bad loan, there’s no reason for Uncle Sam to finance the industry’s inflated executive salaries, overextended branch networks and prime time TV ad campaigns.

Allow me to introduce The Axxess Plan.

Effective immedately, consumers and businesses would be able to borrow at the fed funds rate at 2 percent, just like the big banks do. This means that every cash-strapped homeowner would be able to refinance his mortgage and cut his payments in half, saving thousands of homes from foreclosure. Consumers could also refinance their credit card balances, auto loans and other debt at interest rates they can afford. And the nation’s businesses, flush with affordable working capital, would now be able to hire employees, gear up production and roll out big ad campaigns just in time to save Christmas.

Unlike the government’s plan, the Axxess Plan would cost U.S. taxpayers absolutely nothing. Even if a small percentage of borrowers defaulted, it’s hard to imagine that it would cost the government anywhere close to the $700 billion it’s proposing to spend on loans that have already gone sour.

Sure, certain banks and brokerage firms would go belly up with nobody to take their mortgage assets off their books. But that wouldn’t be a problem since we’d all be banking with the Fed. Unemployment wouldn’t be an issue, either, since tellers and branch managers from the private sector would now have cushy government jobs. (Their CEOs wouldn’t be making $100 million a year anymore, but I’m sure they could sell their Ferraris on eBay and find a way to survive.)

Now, I know what you’re thinking. It all sounds great, but wouldn’t giving everybody government-backed loans at 2 percent interest just trigger another housing bubble?

Maybe it would. But, right now, that wouldn’t be such a bad problem to have.

David Fisher

September 24, 2008 8:12 PM

What ever happened to the free market capitalism that we saw when oil prices were rising so quickly. So, when they are making money hand over first we should stay out of the way and when they fail we should help them back up? What about the millions of people nationwide who are losing their homes? Why don't we put this money at the source of the problem and use it to help people refinance and keep their homes?

Mary Enstrom G.

September 24, 2008 10:45 PM

Like millions of other hardworking, middle class Americans (often working two or three p-t jobs), I was frugal and saved the money I needed to make purchasing a home possible! It was my savings that actually made it possible to pay off a mortgage almost immediately! I am now a parent of a developmentally challenged young man. As soon as he could understand, I told him that he was a capable boy and now he tells me he is a capable man. He takes pride in his school work/job training. He isn't aware of what is happening with this bailout proposal, but I continue to help him learn all he can about acting responsibly. I am disheartened that those involved in this financial crisis, including those who should have provided oversight of lending policies, will not be held personally responsible! How will this situation affect the other millions of people who have special kids or special circumstances and who trusted in the word of those we voted into office to protect the people's interests/assets? Simplistic/idealistic as it sounds, I am a realist and a practical individual, and I posit, "Are all the politicians, CEO's, mortgage brokers, et. al., who directly/indirectly supported, e.g., inappropriate lending practices, willing to sell off/liquidate many of their assets in order to bolster the faltering economy?" How many other billionaires like Buffett are willing to bolster confidence in our long term solvency by presently investing in the market? How about a Gates or a Winfrey or any no. of other high profile individuals? Perhaps they have enough in assets that it wouldn't harm them financially to invest a billion or two, but by voicing their confidence they would reach a wide audience. I don't philosophically support a bailout, because I believe, once again, the people who worked the hardest and took responsibility for their debts, will have to bear the brunt of the burden. I have no illusions about the unfairness of life, I just hope this present situation will motivate people to become more involved in holding their elected officials responsible and will become more active in their political system at a grass roots level! Technology now affords them that opportunity instantly!
Thank you for the space to air some of my views!

Henry (ii)

September 24, 2008 10:47 PM

Anybody consider the alternative of no bailout. The worst case would be an unemployment rate of 10% for two years for the market to settle down. That would be an additional unemployment of 6 million people to the current unemployment rate of 6%. Taking into consideration that 10% of the illegal immigrants, or 2 million would leave due to job loss, we need to create 4 million jobs. For the median salary of $40,000, that would cost $320 billion. That is far less than the $700 billion, and some even put the eventual bailout cost at $5 trillion. If the government spend the $320 billion wisely, we would repair some of our bridges, boost innovation, and build a competitive edge in the new green industries.

Buddesatva

September 24, 2008 11:09 PM

I was hoping this article presented some alternatives. My first impulse is that we should build something, create something, draw people together in a problem solving drive. Somebody's got to pay for it. That is the core of this problem. Without the lending engine, we don't know how to have an economy. At least not one that permits the pleasurable excess' we have all grown accustomed to.

Sally

September 24, 2008 11:22 PM

I think that people are overextended in their credit and they don't need more debt. The need their debt reduced. So, I propose instead of giving money to the mortgage companies, give it to the consumers as follows. All mortgages should be re-evaluated, and monthly payments adusted to that no one is using more than one week's pay to make their monthly mortgage payment. By reducing payments for those who are overextended, or were duped into high-interest mortgages, it will leave more money in their pockets to actally spend it on other things and stimulate the economy from the ground up. People will be able to keep their homes, and banks won't end up in the real estate business, holding properties that keep dropping in value. Funding for this process can come from the hundreds of multi-millionaires/billionaires who have made their fortune off of the backs of the working class. Get each of them to give back a few million/billion each, as Warren Buffet did today. People will feel good about themselves that they can once again make their mortgage payments. They will be less depressed and the country will avoid depression as well.

Will Flood

September 25, 2008 12:00 AM

"If" you get a panic .. "If" .. wake up America ... the rest of the world's been selling their holdings for a year. The only panic is at Hank Paulsen's private club on Wall Street, who invented this bag of excrement and has been left holding it. The Soviet Union failed because the State owned the losses. If we're going back to the USSR, Paulsen, Bernancke and the rest of the crooks should be going to Siberia!

joe

September 25, 2008 12:19 AM

The idea that American markets will cease to exist without resurrecting Goldman Sachs and the like is false despite what Paulson says. As long as there is value, there will be buyers and sellers. This bailout is for the rich wallstreeters who own our beloved politicians. Let the bubble burst and the free market prevail-stop corporate welfare.Bush -who vetoed a bill giving healthcare to children as too expensive suddenly found 700 billion dollars for himself and his friends-stop his rape of America. Contact your elected officials and let them know they will be voted out if they support this incredible extortion of America.

Radioceleb99

September 25, 2008 2:36 AM

THE TRUTH IS POLITICIANS ARE UNKNOWINGLY SETTING THE STAGE FOR FINANCIAL ARMAGEDDON
The untold truth is that the bailing out Fannie Mae, Freddie Mac and AIG only served to shake the confidence of foreign investors in the US financial system.
If the proposal to spend $700 billion buying troubled assets from U.S. banks passes it is more likely than not to further shake the confidence as it will serve to dangerously increase already-high U.S. debt levels.
The further weakening of the Treasury balance sheet in the face of increasing global liquidity demands will further weaken the dollar's status. As pressures continue to mount, foreign central banks will be forced to abandon support including the credit swap markets. Protectionism will ultimately take over. The US Treasury having spent all of the $700 billion will irrefutably be in a substantially weakened position. So you have to ask yourself: is it reasonable use of taxpayers money for congress to provide financing to support foreign investors caught in the subprime problem?
The problems associated with deleveraging US housing and credit markets will persist for several years. What some politicians refuses to recognize is that there are strong forces working against the US. Global risk tolerance and belief in US economic fundamentals has declined precipitously and there is nothing that Wall Street or the US Treasury can do to change it. Unfortunately deleveraging assets is a fundamental part of reducing risk.
Why $700 BILLION UPFRONT IS RECKLESS:
The reverse auction format in which firms would bid to sell their debt to a $700 Billion Dollar Fund would create a situation in which the sellers would not have the necessary sense of urgency needed to aggressively price their bids. A $700 Billion dollar fund with a monthly burn rate of $50 Billion would encourage sellers to collectively holdout for prices that are far above what the debt is really worth. It should be obvious to everyone that the sellers are much more informed and are in a far better position to understand the nuances of their portfolios as well as the future loan performance modeling. The governments inferior position could easily leave the taxpayers suffering unimaginable losses that will only be discovered well after the treasury runs out of money.
We need to shred the $700 Billion upfront commitment. A more serious approach would be to authorize an initial commitment of $200 Billion and pre-schedule subsequent hearing on additional commitments in advance. This would leave enough margin of uncertainty whereby the sellers desire to collectively hold out for higher prices would be tempered by their fear of loss that they might miss the governments gravy train altogether.

InlineBusiness

September 25, 2008 3:09 AM

When you are going for a mortgage, It is important to make a plan and try to be free from the mortgage as early as possible.

Smart Equity - mortgage Payoff, ask mortgage, live mortgage free, mortgage debt

Glenn Osborne

September 25, 2008 3:33 AM

Why not Bailout the American people? Use a small amount of the 700 billion dollar bailout and send every American taxpayer a real economic stimulus package of $250,000. Mortgage company's would have home mortgages paid. Those without homes would be buying and building new homes. Large and small business would prosper. Thousands and thousands of jobs would return to the American people. The list goes on and on. The remainder of the 700 BILLION bailout the Big business.

Radioceleb99

September 25, 2008 6:28 AM

THE SECRET OF WHY $200 BILLION WILL BEAT $700 BILLION…
In a reverse auction format firms bid to sell debt to the government. Having a $700 Billion Dollar Fund would create a situation in which the sellers would not have the sense of urgency needed to aggressively price their bids. The bailout funds modest burn rate of $50 billion a month would encourage sellers to collectively holdout for prices that are far above what the debt would bring under competitive bidding. Let’s not forget that the sellers are much more informed and are in a far better position to understand the nuances of their portfolios and the future loan performance modeling than the “experts” the govt. is going to hire. The governments inferior knowledge could leave the taxpayers suffering unimaginable losses. Worse yet those losses may only be discovered well after the treasury runs out of money.
Forget the $700 billion. Authorize an initial commitment of $200 billion and pre-schedule subsequent hearings for additional financial commitments in advance. This would leave just enough margin of uncertainty that the sellers desire to hold out for higher prices would be tempered by their innate fear of loss that they might miss the governments gravy train altogether.

Gaius

September 25, 2008 7:43 AM

Set a good example now - return bonuses and jail time.

Laura Hedlund

September 25, 2008 11:49 AM

Decades of greed and fear have created this mess. Can the spirit of Love and Trust solve it?

I do not want ANY of the toxic loans to be put on the taxpayers. This is basically giving from the middle class to the investor class.

What if house prices went down by 50%. While there will be temporary pain; a new Economic Renaissance could result! It was not tight credit that caused the mortgage mess but the fact that houses became too expensive for average people. While the investor class may lose money, the result could be more affordable houses and products for people. Could this be an example of the Free Market in a democracy creating a needed correction. We need to trust that the marketplace work. The fundamentals of the economy lie in the people not in the institutions. I support up to $50 billion to assist

Natural consequences can be painful, but they work.

Chris J

September 25, 2008 4:08 PM

With $700 billion, you can give 17 million homeowners $50,000 that goes to their lender on their behalf. This puts an end to the foreclosure (another 1 million expected this year), infuses the banks with cash, and shores up the bad paper that's dragging us down.

I'm sure great minds will find all kinds of problems with approach, but is anything they are preparing to do perfect? At least this allows parents to look their kids in the eye and say "it's going to be alright" while maintaining their dignity.

Steve

September 25, 2008 4:28 PM

I invite you all to write your representatives with the following suggestion. An easy way to write them is via http://www.congress.org/congressorg/headlines.tt

Please look at the Dave Ramsey alternatives to spending $700Billion. You can read or listen to the current issues and the alternative plan.
http://www.daveramsey.com/etc/fed_bailout/economic_cleanup_10887.htmlc

The solution in short is to have Congress change the sarbains-oxley mark-to-market accounting law and extend government mortgage insurance to sub-prime loans. If this would happen no $700 TRILLION Bailout would be needed at this time, if ever. The American people do not belong in the mortgage business even if we can end up making money at it in the future. This plan will free up the current credit crunch and we then can wait to see if any money needs to be put into the system at a later date. This could save each of us, the American taxpayer our hard earned money.

The reason the President spoke out last night is because Congress is getting push back from the American people 9 to 1 against the bailout. Bush has called McCain & Obama in today to push this flawed plan. Our Congress people are going to vote for this because all three of those men are going to support it and then our Congressmen & women are going to say leadership told me to support it verses doing what the American people are telling them to do. Congress needs an alternative to push and the above plan will work if it is tried.

This solution is not a Democat or Repblican plan/idea. This is an American plan/idea that is well beyond party politics.

Steve

bjc45

September 25, 2008 5:47 PM

I have a question rather than a comment. If the Treasury were to use the $700 billion to bailout homeowners, how does the government ever recoup this money? If the money is used to bailout the lenders at least the money is used to buy an asset that can be sold at a later date and recoup part, if not all, of the $700 billion outlay. I am not advocating either approach, I really don't know the answer.

ronbaby

September 26, 2008 6:07 AM

As anybody with half a brain has figured out by now, there's been a truly epic-scale Ponzi game going on in this country for quite awhile now, involving not only greedy bankers, but also millions upon millions of greedy real-estate speculators (including my own brother, who idiotically bought two "fixer uppers") AND greedy first-time homebuyers, all of whom believed they could get something for nothing (and all of whom did, for awhile anyway). Well just as Nancy Pelosi said today, the Party is now Over. The only real question now is: Who is going to get stuck with the tab? Obviously, there is a lot of engineering effort going on right now to try to arrange things so that I and others like me who had absolutely NO HAND in creating (or profiting from) this disaster will be forced to pick up part of the tab anyway.

Three simple points:

#1) Bob Reynolds (see comments above) is right. If the problem is that the credit markets are "freezing up" then the Right Way to solve that is NOT for Uncle Sam to go around buying toxic/worthless/should-never-have-been-sold mortgages but rather for Uncle Sam to simply start lending money itself. As Reynolds said, Who needs these greedy and expensive middlemen ? We really DON'T need then now, especially when all they are doing NOW is FAILING to loan money, except at exorbitant rates. They are proving every day now that they are only self-serving parasites who are useless to the nation in a time of crisis (not like the fabled A.P. Giannini, founder of BofA who famously lent money to San Franciscans after the 1906 quake).

#2) The Pols in Washington are falling all over each other to convince us that businesses everywhere will fail and (thus) not make payroll if they don't have ready access to cheap and easy credit, thus starting a spiral that will hurt us all. Gee! Ya think that maybe SOME businesses maybe became SOOOOO ADDICTED to cheap credit that they could not survive without it and thus, in a truly Darwinian Free Market, they now DESERVE to die? I do. Let the cheap credit addicts die. The economy will be better for it in the long run. These jerks didn't actually have viable businesses if the first strong gust of wind in the credit markets could knock them over.

#3) In the rest of the world, this country (USA) is now a joke. Why? Because we have NO power of any kind anymore. Why? Because for the past 30 years or so the whole country has been on one long buying and spending binge. We consume and consume and consume and the trade deficit goes up and up and up until we don't even own the shirts on our backs. What caused this? It's our spending-oriented culture and economic system, in particular the Tax Code which taxes the income produced by honest labor while rewarding us with tax breaks when we consume crap that we don't actually need and actually can't afford... like for instance single family homes. These incentives are 180 degrees bass-ackwards. Only an idiot would design a system like this.

I know that these words will be considered economic heresy by some, but so be it. In the classic movie "It's a Wonderful Life" Jimmy Stewart's character asked a simple (and intended to be retorical) question about home mortgages and the people who get them: "Doesn't it make them better citizens??" We now have the NEW answer. The answer is: No, it makes quite a lot of them paupers and deadbeats who would have been better off if they had just continued to rent. (And WE would have been better off too, cuz we wouldn't have had to bail out millions of these greedy nitwits, as it appears we are now going to do.)

dotpinelli

October 1, 2008 12:16 PM

no to 700$ bail out

David

October 2, 2008 1:19 PM

I like the Save America Plan described at http://americais.ourcreation.info .

Save America Plan

Purpose
Shore up the American financial system and economy, with risk takers (such as the financial companies and the investors, management, and employees who freely chose to be involved with them) paying for their failed gambles, not the U.S. taxpayers.

The Plan
Insure Americans' savings, including retirement plans
Savings and checking accounts: Ensure the FDIC (Federal Deposit Insurance Corporation) and NCUA (National Credit Union Administration) have the temporary peak resources they need to keep insuring checking and savings accounts up to reasonable levels.
Investment accounts: Nationalize the SIPC (Securities Investor Protection Corporation) so that, like the FDIC and NCUA, it's backed by the full faith and credit of the U.S. Government, with financial companies paying risk-based premiums so that it too has a net cost of $0 to American taxpayers over medium term time horizons. Ensure the SIPC has the temporary peak resources it needs to keep insuring investment accounts up to reasonable levels.
Money market funds: Nationalize and make permanent the one year money market insurance plan so that, like the FDIC and NCUA, it's backed by the full faith and credit of the U.S. Government, with financial companies paying risk-based premiums so that it too has a net cost of $0 to American taxpayers over medium term time horizons. Make it a responsibility of FDIC or NCUA, rather than creating a new government agency.
Education: To reduce panic, educate -- through a single unified campaign -- savings, checking, and investment account and money market holders about their FDIC, NCUA, SIPC, and money market insurance rights.
Preserve then increase Americans' wealth, including that in retirement plans and housing
Credit bubble: Nationalize the consumer and corporate credit rating agencies so that credit ratings can no longer be manipulated by the financial industry for their own gain. Educate Americans that credit is a responsibility, not a right. Educate Americans about the value of saving (living within their means) versus consumption (living outside their means), and how to do it.
Housing bubble: Educate homeowners who are in trouble to 1) renegotiate their mortgages and home equity loans/lines and 2) if the mortgage holders are unwilling to renegotiate, to sign their house over to the mortgage holder, rent for a while, and then buy a new home when housing prices fall to sustainable levels. To ensure the mortgage holders negotiate in good faith, ban the mortgage holders and credit rating agencies from changing a homeowners credit score due to defaults that occur during an established grace period.
Financial-driven stock market bubble: Educate investors in poorly managed financial companies to sell their holdings, take their losses, and reinvest what they have left...diversified across some combination of deposit accounts, money market funds, bonds, stocks, real estate, small businesses, etc. Educate all Americans to rebalance their investments once per year, and why not to sell during a panic.
Reestablish financial liquidity
Stop talking about The Great Bailout ! This only serves to make the financial companies bury their heads in the sand about their failed gambles, rather than work them out. Shatter their hopes and dreams that U.S. Government officials will steal money from U.S. taxpayers and give it to them.
Educate financial companies to cut their dividends to preserve capital, and raise the interest rates and other incentives they can offer to attract capital. Educate them to make deals to survive, or choose to fail.
Let the weak financial companies fail. The investors, management, and employees who freely chose to be involved with them will lose their gamble and pay the price. However, Americans' savings are insured. The FDIC, NCUA, and SIPC will sell off the assets, good and bad/toxic, of the failed financial companies at real market prices, as they have been doing for years. This is the only way to ensure we have strong next-generation financial companies in the America economy, who know how to manage risk, among other things. Should there be a short term loss, it will continue to be repaid by financial companies paying risk-based premiums so that there is a net cost of $0 to American taxpayers over medium term time horizons.
Let the Treasury and Federal Reserve continue to grease the wheels of liquidity with the responsibilities and authorities you have already given them. Establish better controls over the Treasury and Federal Reserve so that they do not sneak The Great Bailout past the rest of the U.S. Government and the American people by making short term loans that are too large relative to the low value of the high risk debt accepted as collateral.

Assumptions
The bursting of the credit bubble, housing bubble, and financial-driven stock market bubble cannot be stopped, only slowed.
We can choose to slow the bursting bubbles, or let them happen at their natural speeds.
Either way, we will reach the same bottom before we can rebuild (unless U.S. Government officials make it worse, as The Great Bailout would do).

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About

BusinessWeek editors Chris Palmeri, Prashant Gopal and Peter Coy chronicle the highs and lows of the housing and mortgage markets on their Hot Property blog. In print and online, the Hot Property team first wrote about the potential downside of lenders pushing riskier, "option ARM" mortgages and the rise in mortgage fraud back in 2005—well ahead of many other media outlets. In 2008, Hot Property bloggers finished #1 in a ranking of the world's top 100 "most powerful property people" by the British real estate website Global edge. Hot Property was named among the 25 most influential real estate blogs of 2007 by Inman News.

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