America, Speak Out

This economic crisis is touching the lives of every American in some way. Rich or poor it affects you. It is time we stand up and speak out.

The most recent announcement of the government (the taxpayer…you and me) making available $30 Billion Dollars to save Bear Stearns and further enrich J.P. Morgan Chase is simply just not right.

Bear Stearns was a major contributing factor to our “mortgage meltdown” as well as to the world wide economic crisis. They were leaders and pioneers of many of the sub prime programs for which guidelines were reduced not to benefit the homeowner but solely for their own profit.

As Ralph Roberts wrote in his post “They Knew”, they most certainly did know that this “ponzi” scheme they were playing had to come crashing down. It is not rocket science to realize that if you loan someone with an established bad paying credit record 100% of the purchase price, allowing the seller to pay 6% of the purchase price towards closing costs – creating a no money purchase - on a house that is more then double what they can truly afford and whose value has been artificially inflated – that they surely will default in the not so distant future. They KNEW!

The government’s position is that we need to save Bear Stearns to stabilize the world economy. In other words we are coming to the rescue of foreign banks like UBS and Deutche Bank, as well as banks stretching form England to Australia, all who invested in Mortgage Backed Securities from Bear Stearns and other Wall Street firms.

Everyone is forgetting that these “investors” made billions of dollars on these transactions before the collapse. The fact that they may have used their profits irresponsibly, as Bear Stearns must have, in no way necessitates the need for you and me to come to their rescue while we are drowning.

This most recent action by our government, along with other proposed cash based bailout proposals and programs prove that our government is run by big business. The amounts of money they speak of are mind boggling, 30 Billion, 150 Billion, 200 Billion Dollars.

We, the everyday working citizens of this country, are paying for this.

Another Solution Proposal

In a previous post, I suggested that banks such as Bear Stearns consider re writing their loans, increasing their cash flow by earning some renegotiated interest and possibly writing down loan amounts to realistic current market values.

During the foreclosure process, banks do not collect any money on a loan. In fact, they spend money mostly on legal fees and court costs. In addition, non paying, delinquent accounts, contribute to loss of revenue and cash flow. These non paying accounts can exist for up to a year before the foreclosure process is started. No statistics are available on how much money these accounts represent.

I have been in credit and finance long enough to know that if my company is failing to due lack of cash, I need to generate more cash. What better way then to go to your delinquent accounts and work out some type of repayment plan. This alone could be hundreds of millions of dollars, perhaps enough to keep Bear Stearns operating and avoid a “bailout”.

In addition, by taking write downs on properties while in a performing mode, the bank losses are book losses not cash losses. Yes, it will lower the stock value but not as much as is happening with this proposed buyout.

Speak Out

Whatever happened to the basic principal of our country, “For the People, By the People”? It is now “For Big Business, by Big Business” with the government (you and me) as their financiers.

We need to voice our opinions to our politicians. Write them, email them, call them. This is still America and we are allowed, no, obligated to do so.

With well over 2 million Americans facing foreclosure – and more to come, unemployment increasing, the real estate and mortgage industries in a massive decline and our economy crashing, we must begin to protect ourselves. It is time we speak out.

NO MORE CORPORATE BAILOUTS!