As if the AIG, Freddie Mac, Fanny Mae, and Bear Sterns bailouts weren’t bad enough, this last week congress has been considering a wide scale financial rescue plan proposed by the executive branch that will require 700 billion taxpayer dollars to fund. Congress is debating what this money will be used for and what kind of oversight they want (the executive branch wants a blank check with little or no oversight, of course). One use of the money could be to buy up “toxic loans” to help cleanup bank balance sheets. It is possible the government will actually make money on this entire deal, but that is far from certain – and it is also beside the point.
The financial institutions that are in crisis have put themselves in that situation over the last 8 years by making loans to unqualified home buyers – a lot of times requiring neither a down payment nor income verification (i.e. liar loans). These lenders loaned money to people at the height of the housing bubble, didn’t make sure they could make their payments, and didn’t give themselves a safety cushion by requiring a 20% or so downpayment. What where they thinking?
The irresponsible borrowers, on the other hand, lied, in many cases, on their stated income loans, bought houses they couldn’t make the payment on once the adjustable rate kicked in, and in some cases bought multiple houses to try to flip. This is risky investing. I don’t expect anyone to pick up my losses in the stock market. Likewise, they shouldn’t expect everyone else to pick up their losses in the real estate market.
So what can you do to stop the government bailout? Make your voice heard. Here are some steps you can take to make your opinion known:
- Call or e-mail your congressperson. Go to the house of representatives web site and then enter your zip code in the upper left hand corner to find your congress person.
- Call or e-mail both your senators. Go to the senate web site and select your state in the upper right hand corner.
- Sign the Tax Payers Against a Wall Street and Mortgage Bailout petition. Press the button that says “Click Here to Sign Petition”.
- If you’re on Facebook, join the Americans to Stop the Bank Bailout! group.
When you call your representatives, you can simply say to the staffer who you talk to “I oppose the financial rescue plan. Please let the senator (or congressperson) know. Thank you.”
Please leave a comment if you have other ideas for opposing this bailout.