Whoever gets the nomination, this will be staring them in the face.

[Neshanic]

http://www.blownmortgage.com/

"In a confidential proposal to the government Bank of America warned that nearly $800 billion in mortgages (of all types, not just subprime) are at “moderate to high risk” of defaulting due to detoriating housing conditions over the next 5 years. The Bank of America proposal calls for the creation of the Federal Homeowner Preservation Corporation to lead homeowners and banks out of the housing bust."


"From the New York Times article covering the increasing prospects of a federal housing market bail out:

To prevent that, Bank of America suggested creating a Federal Homeowner Preservation Corporation that would buy up billions of dollars in troubled mortgages at a deep discount, forgive debt above the current market value of the homes and use federal loan guarantees to refinance the borrowers at lower rates.

“We believe that any intervention by the federal government will be acceptable only if it is not perceived as a bailout of the bond market,” the financial institution noted.

In practice, taxpayers would almost certainly view such a move as a bailout. If lawmakers and the Bush administration agreed to this step, it could be on a scale similar to the government’s $200 billion bailout of the savings and loan industry in the 1990s. The arguments against a bailout are powerful. It would mostly benefit banks and Wall Street firms that earned huge fees by packaging trillions of dollars in risky mortgages, often without documenting the incomes of borrowers and often turning a blind eye to clear fraud by borrowers or mortgage brokers."

Looks like the Bush family tradition is strong...

[cloudythescribbler]

1. I am a socialist not given to the B of A's politics, but some version of this idea would be good ...

[Neshanic]

2. You are a socialist, and a banker bailout is OK with you? How does that work?

[whosinpower]

3. This isn't going to help the average joe

It is going to forgive shoddy practices put in place by the banking industry. And what is worse, it would put pressure on the value of the US dollar. Your broke. Your nation is operating under the delusion that deficits do not matter - and if it gets bad enough, just forgive and forget. It isn't going to wash out that easily.

See, thing is, you don't have the money to bail out the bankers....so the Fed's are going to have to borrow it from somewhere. Why should the Fed accept the loses for what the bankers greed and shoddy practices enabled? Why should your taxdollars be spent in such a way? Why should your grandchildren be burdened with a debt that the bankers incurred?

This is a stop gap measure that does not fix the fundamental issues facing the subprime mortgage crisis. I predict such a measure would increase inflation and decrease the value of your greenback.

[Warren Stupidity]

4. This is socialism for banks

for you and me: same old shit.

No thanks.

[Pab Sungenis]

5. Here's a counter-proposal.

The Federal board would be empowered to buy defaulting mortgages...at 10 cents on the dollar.

In turn, it would forgive 100% of the mortgage above the market value (as BoA recommended), but also forgive all late fees and compounded interest, recalculating the mortgage at a flat rate of 1.5% based on principal due only.

This way, the banks don't take all the hit for writing the bad mortgages, but they also don't reap the reward of a full bailout.

[Warren Stupidity]

6. So my tax dollar still goes to the banks, just not so much?

Do I get a rebate on the lost value of my house, or just the banks?

[Sadie5]

7. More pressure on banks

to lower the credit card interest rate that has pushed the country into debt. This might be part of the help banks are seeking.

[Pab Sungenis]

8. Yes, you would.

Or at least you should. Admittedly, I've not had time to formulate a full plan. Hopefully some plucky non-DLC lawmaker will put together something good for everyone.

[Warren Stupidity]

9. Its still crap. Let the housing bubble collapse.

Instead pouring 500B of taxpayer money into the banks, put it into universal healthcare and alternative energy infrastructure. I'd much rather my tax dollars were making sure everyone gets to see a doctor, and went to subsidizing solar, wind, and geothermal energy generation than into making sure that the Rockefellars aren't losing their shirts.

[cloudythescribbler]

10. There are some who object to NOT having ALL the costs absorbed by the banks, but ...

really the point is to take as much of the burden as possible off the INDIVIDUAL homeowner, which even the B of A proposal helps to do; then the question is -- who absorbs the cost? It seems that some cost borne by the general public (ie public money) is OK, and not just some kind of giveaway to the banks, and not 'anti-populist'. The banks should absorb some of the costs, but for reasons outlined below, that is not the key (mainly a highly charged issue always raised in these types of situations).

I feel the same way about environmental issues -- to move REALLY fast, a large portion of the burden needs to be borne by the state b/c if too large a burden is placed on particular corporate interests, they will resist with all their might. These policies are to help NEEDY individuals on one hand and/or the public interest on the other, so public absorption of much of the cost makes sense (as well as being politically more feasible).

For more populist policies, having the following would help:

1), repeal of the various tax cuts to the wealthiest put forward by the W Bush folk; there is plenty of room to raise a variety of the tax rates on the wealthy, and close loopholes

2) return of the inheritance tax, inflation adjusted, and quite possibly with some of the special exceptions and exemptions that Democrats have supported widely (eg "small" businesses and farms)

3) A tax (maybe 100% or more) on corporate remuneration of their employees, and some application to "independent contractor" individuals where an individual receives more than $500K/yr compensation; simultaneous reduction of payroll taxes BOTH on businesses and on individual payees' first $100K of income.

4) The beginnings of a "wealth tax" even if it is only a fraction of 1%

5) A similarly "small" transaction tax on the buying and selling of securities, arbitrage transactions, etc.

6) Application more vigorously of a negative income tax whether the recipient earns income or not, as WELL AS earned income credit expansion; this mechanism can be used widely to help especially the marginal poor, lower working class

7) at least formulating health care with an eventual goal of a single-payer system in mind, if those in power (as seems to be the case) are unwilling to pursue SP now -- which progressives should strongly advocate independently (obviously) of the Democratic Party

8) Massive job creation, targeted at geographic areas where unemployement is very high (eg, local unemployment 'caps' that require a number of jobs to be generated in any district with above x% unemployment, etc). Creation of a lot of public sector green jobs overlapping with this

9) Changing many of the laws and policies regarding unions and unionization

Many other measures, all incremental steps that are likely to have wide public support in the PRESENT capitalist system and polity that we have (as opposed to in some idealized society).

I also believe in the building of a serious socialist movement in this country, but the above are NOT predicated on that.