Robert (gurdonark) wrote,
Robert
gurdonark

Suggested ways to help Main Street

Here are ideas on ways to help ordinary people:


1. Repeal the Bankruptcy Reform Act.

One of the bright ideas of the same lenders and moguls who brought us the current crisis was the Bankruptcy Reform Act. Senator Biden, sadly, gets "credit" for this fiasco, as well as the Republicans. Despite the evidence that most people file bankruptcy because of job loss or health care costs, this statute was amended in order to target a small percentage of people who file fraudulently. The statute places most people into Chapter 13 repayment plans instead of Chapter 7 discharges. This punitive measure is counter-productive, as it fails to achieve its goal of increased repayment, and instead prevents potential consumers from getting a fresh start. Just repeal this "reform" in its entirety--a bipartisan error. The reality is that most people who bought homes they cannot afford will never be "saved" by a stay on foreclosure, because they will not be able to afford the payments. "Mark to market" Chapter 13 plans may be a solution, but will require calibration to prevent abuse. But reforming the "bankruptcy reform" can occur now, at no cost to anyone.

2. Improve veterans' educational benefits.

The GI Bill brought America prosperity after WW II. This is one entitlement that pays our nation back directly. People risk death in Iraq and Afghanistan. They deserve
better than Walter Reed, food stamps, and diminishing benefits.

3. Eliminate the unfunded mandates of "no child left behind" and redirect the federal expenditure on education to meet critical school infrastructure needs.

There are good things in the education reform movement, but in general,the results have not justified the imposition of unfunded mandates. Student testing is not really the issue--imprecise and unfunded "reforms" are the issue. Mr. Bush failed to be the "education president", just as he failed in other areas. Federal spending on education might even decrease, and the funds could be expended on better priorities than the Bush education agenda.

4. Require sub-standard loans through federally funded programs to be supported by loan-to-value ratios
commensurate with the risk.

The solution to help Main Street is not to let people buy homes they cannot afford. This is instead what caused the issue. Both in this crisis and in the savings and loan crisis, sub-standard loans were made to people unqualified to receive them, while brokers, lenders and hangers-on profited from the fees. Our government ended up a facilitator of junk mortgage paper through its fiscal policy, through Fannie Mae and through Freddie Mac, while gluttons feasted. Now people will lose homes they never should have been allowed to purchase, and we will pay the gluttons' ticket.

Every time some genius with an MBA tries to replace loan underwriting or insurance risk underwriting with
cash flow madness, our economy suffers. Contrary to the former free market boasts of the right, our government is entirely intertwined in the home loan business. It's time to tighten the twine.

It's wrong to make scapegoats of people who don't understand their own financial situation due to a lack of funds and training. It's right, though, to keep from lending to people who will never repay--particularly if the lender is indirectly going to be guaranteed by the taxpayers.

5. Give a tax incentive to buyers of small American cars.

How do we create a robust, greener domestic car industry? Rather than subsidizing loans for SUVs, grant tax incentives to people who buy domestic cars rated at least 32 mpg. Incentivize Detroit to build hybrids and workable high mileage small cars.

6. Eliminate earmarks.

The Democrats have remedied in part the earmark madness of the first six years of the Bush administration, but it is time to go further. We have really important needs for our funds now, so that hidden pet projects funding should no longer be the way to bring home the pork bacon.

7. Make the SEC an enforcement agency once again--and fund it to enforce the securities laws. Regulate ratings agencies through the SEC.

8. Require banks and insurance companies to refrain from holding derivatives.

We have had enough derivative madness. No entity holding depositors/insureds money should carry these risky assets. Leave the wild leverage to entities not entrusted with risk free money.

9. Fund the National Public Health service to improve national fitness and health care for the impoverished.
We badly need a national health plan. Until we can find our way to pass one, let's get our national public health service ramped up in the inner city and in rural areas.

10. Sell special savings bonds for education, with a guaranteed interest rate. Use the proceeds to fund
more broadly available student loans.

11. Effectuate a gradual phased withdrawal from Iraq, using the funds saved to provide materiel assistance for the Iraqi government to defend itself at a fraction of the cost.

It's not really a question of "pro war" or "anti war". It's a question of things having run their course in Iraq, as even the Iraqi government recognizes. We cannot be a perpetual crutch--Iraq will grasp freedom, or let it slip from grasp. We can spend a fraction of what we spend now and fund them to give it a try.

12. Ensure we have solvency regulation for each kind of financial institution which is "too large to fail".
If we intervene to save any institution from failing, then taxpayers must receive not only repayment but also a share of profits before anything goes to equity holders.
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