Thoughts.com

In order to fix the financial market issues, I would propose the following idea: the government of the United States of America should be responsible for backing all the mortgages that could still be salvaged. I believe our government, and its officials need to take responsibility for letting this happen by relaxing the rules in the financial markets.

In order to fix the market, several things would need to occur at the same time.

1.  A full blown investigation into the financial markets would need to be conducted. This investigation would need to be done by a truly independent body of people who should be a mix of individuals who have been impacted by the current market issues. This body of individuals would need the power to have full transparency into all matters regarding the banks, markets and those involved. All personal information should be kept confidential, and when this investigation is complete, it should provide a full blown report of what, who, and when. In order for this to occur, the next thing would also need to happen.
2. Immunity from providing information that would cause self incrimination. All the information that was given and delivered up by the financial institutions and individuals would not be admissible in court to be used for prosecution.
3. All properties need to have their real value assessed. Every mortgage purchased since Bush has been in office should be able to apply to have the real value of the property assessed. This assessment would be backed by the United States Government, which would guarantee the value of the property for the life of the mortgage.
4. All participating banks in the program would need to pay back the money that was given to them by Paulson, via the Federal Reserve.

So here is how this would work:
The group conducting the investigation would have full authority to see all financial records of all financial institutions. The goal would be to:

1.  Determine which debts are bad, if they are mortgage industry debts, and who holds the paper on those mortgages.
2. Determine how this paper was sold.
3. Provide all explanations as to how we got to where we are now.

The group overseeing the Immunity issues would accept all information, glean what information could be gleaned from it, and then process that information in a way that:

1. Prevent any personal information regarding the perpetrators from being disclosed during the investigation to the public.
2. Record the processes and instruments used to conduct the bad business.

The group overseeing the re-evaluation of the real estate market would determine the real value of real estate for each market. Some type of simple formula or calculation with the metrics would be provided that would allow each property to have a real value placed on it. This value would need to be extremely accurate, and would be backed by the United States Government. A good example would to have the insurance agencies that insure the property to provide what fair market value is of each market.

The U.S. Government would then purchase the mortgages at the new fair market value. The home owner would then begin making payments based upon the new market value, but would lose any equity in the home they had already invested. The loan would be paid back at 0% interest for the first 5 years, and then a fixed rate of 5% on the balance for the next “X” years left over. The banks would be paid the current fair market value of the home.

All those who were involved in some sorted way with the financial fiasco would keep their jobs until the settlement was completed. Then they would never be allowed to work in the financial industry again. They would get a “get out of jail free card” for any laws they broke during the fiasco, providing they or their institution provided the information. If the group overseeing the investigation turned up the dirt, then they would be prosecuted to the fullest extent of the law.
Here is what this would accomplish:

1. We would find out what really happened in the financial markets, and then be able to prevent this from ever happening again.
2. The current “pond scum” that did the nasty deed would lose out on any future monies made from the scam.
3. The banks would lose out on any profits on the bad deals they made as a punishment.
4. The home owners who knew they could not afford the loans would lose their initial investment as a punishment.
5. The banks would finally be able to trust each other as the investigation would reveal any bad debts not disclosed, and punish those that hid this information. The banks would know that whatever assets they had, were good assets.
6. The home owner would be able to keep their home, giving them the ability to pay back the loan interest free for five years, on a home with a real value backed by the U.S. Government.
7. The financial market would then be protected from this ever happening again. The market would then take off and stabilize.

Once the mess is fixed, we can look a ideas to change our current process.  Unfortunately you cannot post comments on this site unless you are a member.

Hi,

I keep viewing sites on the internet that spread the news about what is going on around the world. I really like these sites, but few of them provide any real solutions to the problems that surround all of us.

It is my personal feeling that there is a solution to this and it is a very simple one. The leaders of the world and in particular the U.S. do not represent the people who elected them. Since these leaders are elected for a term, it is during this time that they are free to exercise their choices in a way that benefits them the most. As the results of not doing what they were elected to do (represent the people) really have little consequence to them.

For this reason, special interests groups put pressure on these duly elected people.

Without going into detail what I believe that pressure involves, we do see this happen every day in every facet of our government, and political spectrum.

The only way to compete with special interests is to either beat them at their game, or change the way the game is played. The current game involves a mystery of these special interests groups meeting in person with these leaders, after which decisions that seem to duly represent the special interests groups are chosen over those of the people.

It is of course illegal for the special interest groups to bribe, pay off or otherwise influence these individuals, and since we all trust our government and know these things would never be allowed to happen, we can only say that magical things happen during these meetings.

We know there is no way that our election process can be hacked or cheated, so we of course blindly believe when one is elected it was done so fairly and by law. Once these leaders are elected (mostly every four years), they are in for their term.

However, what if we created a new law that required all duly elected officials to represent their constituents? A petition signed by a % of the constituents requesting a vote of no confidence would require a local vote. If the majority of the constituents voted no confidence, the duly elected official would be removed from office. If the voters indicated no confidence, another election would occur shortly thereafter to elect a new official to finish out the term. 

We would still have a set "term" before a new election occurred, but if the elected leader did not represent the wishes of these people, then they could be voted out of office and replaced by another who would then finish out that term.

We would not need to get congressional approval for such laws.  We can pass the new law at the City, County, and State levels of government. 

This would give the power back to the people.

Please feel free to post constructive comments about this idea if you feel so inclined.  Since I know very little about how to create such a new law, how to get it passed locally (petition, then vote I think), I am hoping someone with more knowledge than me can comment on the process.

Unfortunately you cannot post comments on this site unless you are a member.