I think those are all good points.
Remember, the kicker to all this was how the lenders pulled so many people into bad mortgages with teaser loans. People were told that the market was always going to go up, that they could refinance when their rates went up. These people are not deadbeats - they are just in way over their heads.
Yes, the government would have to bail out at below market rates, and the banks et al will have to eat that loss. Given that there IS no market for these bundles, it will be difficult to figure a true value. But, as such, the government has the upper hand if they play it smart. The trick is not letting the banks unload except at fire sale prices. This way the government is actually getting good value, sort of like picking up a good value stock bargain.
As far as other defaults, that is where the provision to allow the government to renegotiate loans it purchased comes in. Keeping someone in a house is not only a 'good' thing, it is the right thing economically. They keep paying, it reduces housing inventory, which helps stabilize prices.
But I don't think the bailout should extend to other debt like credit cards. However, addressing the problem of usury should happen. We got a new credit card a while back (it was actually a replacement for an older card as a result of a bank consolidation) and I was astonished to see the rate was 30%. Geez, I thought that was illegal. Needless to say, we got rid of that card quickly. |
