Madd Money: THE COMMON SENSE FIX

I'm usually not one to SPAM people's emails with things that they are not already associated with me regarding (my scouting families know that I am an annoyingly compulsive emailer when it comes to Troop updates and happenings, but then they already know they're in for that). I'm not one who forwards chain letters, political requests, or any other "PASS IT ON" type of messages. If I ever do, I always BCC them so that others don't know who I'm sending the messages to. That doesn't mean that I cannot use my blog to post about something I care about and want to see others do something about. I've already stated my support for Proposition 8 and that I will vote for it on Election day, and I encourage everyone else to also vote their conscience on election day as well. What follows is not something that will wait until election day. We need to deal with it *NOW!!!

Here is the text of a letter that is being circulated called "THE COMMON SENSE FIX" as relates to the proposed bailout, and some suggestions as to alternatives. Please note that I did not write this, but I agree with just about everything that is in it, and frankly, I consider it a far better proposition than the ones that have been discussed in the house to date. Regardless of your political position or affiliation, I urge everyone to look at this and give it serious consideration. If you agree with the suggestions, send this letter (or word it your own way) to your Representatives and Senators. If you do not agree with the suggestions below, please contact them anyway and tell them what you would like to see done. The key is to SPEAK UP!

Finally, pray for them to resist a spirit of FEAR and to embrace WISDOM. Even if you don't like them or agree with them, pray for them and tell them you are praying for them. There is a spirit over this problem that must be broken. Also, most of the media personalities are afraid as well and that is affecting their reporting. Pray for fear to be removed from them; they are making this worse. While I know it's cliche to say that time is of the essence, in this case, it really is.

THE COMMON SENSE FIX

Years of bad decisions and stupid mistakes have created an economic nightmare in this country, but $700 billion in new debt is not the answer. As a tax-paying American citizen, I will not support any congressperson who votes to implement such a policy. Instead, I submit the following three steps:

I. INSURANCE

A. Insure the subprime bonds/mortgages with an underlying FHA-type insurance. Government-insured and backed loans would have an instant market all over the world, creating immediate and needed liquidity.

B. In order for a company to accept the government-backed insurance, they must do two things:

1. Rewrite any mortgage that is more than three months delinquent to a 6% fixed-rate mortgage.

a. Roll all back payments with no late fees or legal costs into the balance. This brings homeowners current and allows them a chance to keep their homes.

b. Cancel all prepayment penalties to encourage refinancing or the sale of the property to pay off the bad loan. In the event of foreclosure or short sale, the borrower will not be held liable for any deficit balance. FHA does this now, and that encourages mortgage companies to go the extra mile whileworking with the borrower—again limiting foreclosures and ruined lives.

2. Cancel ALL golden parachutes of EXISTING and FUTURE CEOs and executive team members as long as the company holds these government-insured bonds/mortgages. This keeps underperforming executives from being paid when they don’t do their jobs.

C. This backstop will cost less than $50 billion—a small fraction of the current proposal.

II. MARK TO MARKET

A. Remove mark to market accounting rules for two years on only subprime Tier III bonds/mortgages. This keeps companies from being forced to artificially mark down bonds/mortgages below the value of the underlying mortgages and real estate.

B. This move creates patience in the market and has an immediate stabilizing effect on failing and ailing banks—and it costs the taxpayer nothing.

III. CAPITAL GAINS TAX

A. Remove the capital gains tax completely. Investors will flood the real estate and stock market in search of tax-free profits, creating tremendous—and immediate—liquidity in the markets. Again, this costs the taxpayer nothing.

B. This move will be seen as a lightning rod politically because many will say it is helping the rich. The truth is the rich will benefit, but it will be their money that stimulates the economy. This will enable all Americans to have more stable jobs and retirement investments that go up instead of down.


This is not a time for envy, and it’s not a time for politics. It’s time for all of us, as Americans, tostand up, speak out, and fix this mess.