young retired guy

Bailout: Reaching a Deal

It seems to me that everyone is missing something here. We're bailing out a bunch of executives who got greedy and persuaded a whole lot of working people to do something that they shouldn't have done. I think that the simple solution to this whole mess has to do with adjustable rate mortgages, which is what everyone was persuaded to take when purchasing a home. Buyers were told that they could save money, and that they would be able to refinance if the rates were going to go up at reset time.
People in general were paying their mortgages and everything was fine until their rate reset and then everything started spiraling down from there.
The solution would seem to stem from what started it all, and that would be to stop the mortgage rates from resetting. They could even possibly reset at a modest amount, say 1/4pt and gradually move up annualy as peoples income increased. I realize that this solution would cause a lot of financial institutions to lose some of their future profits but it wouldn't sink them. It would stop the new foreclosures, because most people would continue living in their homes and paying their current mortgage. The government wouldn't have to buy subprime mortgages, or bail out companies holding them as they would be performing loans once again.
I know that this simplistic, but in fixing a problem you don't start at the top and work down, which is what everyone is doing in this bailout, you start at the cause (the bottom) and fix it and everything else will work itself out.