I'm no financial wiz, but would this work as a bail out strategy?

[Anonymous]

Everyone (including myself) is so worked up into a frenzy about not bailing out Wall Street. Dems want to be sure "Mama" bails out Main Street, and Republicans don't want to bail out homeowners who weren't prudent in buying a home they could afford (while others who WERE prudent are stuck with their overvalued mortgages...) Everyone has an opinion it seems.

So I was thinking.. as a homeowner myself who bought in 2004 under what my family income could support... isn't the point of this bailout to take the bad debt off the balance sheets of the banks to inject liquidity into the credit markets etc. And no one wants to reward the fat cats on Wall Street, and that song and dance.

It's been rumored that the USG would buy the debt at somewhere between 40-50% of face value, due to both the volatility of a) not knowing how much will go into foreclosure and b) not knowing how much to write-down for declining property values.

So, is it so much of a stretch to propose that maybe the USG and the banks work together to find a way to subsidize the re-writing of mortgages written after say, 2001 or the run up of home prices, to today's value (20% less than 2 years ago). The loss would come off the banks books, and ALL homeowners would benefit, not just the ones who got in over their heads. The government could hold the appreciation value until the homeowners sell at a profit at some future date. Why could this not be a viable alternative that would solve the problem at hand without being a bail out for Wall Street or only part of Main Street? Can anyone comment or offer ideas why this might not work?

[Anonymous]

It would make too much sense and would take the purse strings out of the hands of the controlling party.

[Anonymous]

Read Steve Forbes on forbes.com today. His suggestions would fix this 'book insolvency' without a penny. Might be too late for no money but we can mitigate things.

I am glad Nancy Pelosi POed the wavering Republicans and the bill failed personally - I think they can come up with a better solution.

[Anonymous]

16:39 what is the name of the forbes article?

[Anonymous]

http://www.forbes.com/opinions/forbes/2008/1013/019.html

[Anonymous]

Controlling party? Paulson is a Democrat activist wierdo!