rheffel

The Undisclosed Costs of the U.S. Government Bailouts

I DISAGREE with this bail-out of Wall Street. We should not socialize the losses. If you want to assist Wall Street, the US Government can buy the bad paper from each Wall Street firm today, and amortize the repayment by that firm over 30 years, the typical length of a home loan. And like Student Loans, you must ensure through legislation that these obligations are not annulled via a Wall Street firm declaring bankruptcy. The responsibility for repayment must be assigned to firms acquiring the good assets of these bankrupt companies as well. But the US Government, Treasury, Federal Reserve should not just be handing over the keys of the kingdom (tax revenue) to irresponsible firms. They took the profits and they should take the losses. The orderly process for firms that are insolvent is Bankruptcy Court.

Furthermore, Congress must pass legislation to prohibit derivatives. And the SEC must approve any new financial instrument in the future, in order to prevent Wall Street from by-passing the SEC regulation and jurisdiction.

There is no free lunch. Medicare and Social Security solvency is much more important than any Wall Street firms.

So if the Bush Administration and Congress have to act today, purchase the bad paper today, and make the financial institutions responsible for repayment over 30 years. That will introduce the liquidity into the markets but not just hand tax payer money over to private companies.