Bailout of Banks Is Ludicrous
The banks' proposed bailout wherein the federal government buys all the banks' bad debt so that the banks can have cash to create more loans is fiscally irresponsible and solely helps the banks, not the homeowners. Sadly, the banks are making this solution sound like it will help prevent foreclosures, when the truth is that foreclosures will continue while the banks cash out leaving taxpayers to hold the bag. How does this proposal work? Siimple. The banks want the federal government to use tax money to create a funding agency whose sole purpose is to buy up ALL the bad subprime debt and convert them into a low fixed interest rate for the sake of the consumers. So why won't this work? Because the foreclosures that are happening now have arose while the interest rate is ALREADY LOW! Yes, subprime borrowers are walking away from paying even a month of rent! So the truth is they do not care if the government charges 1% or 5%, they are simply walking away. Guess who ends up holding all these terrible loans now? Yep, we the taxpayers.
Sure this solution may temporarily help the Downtown L.A. real estate market by slowing down foreclosures here and there, but ultimately, it hurts the value of our condos because instead of allowing the correction to happen quickly and moving on to recovery, we are now protracting the decline for another few years, making recovery that much longer to wait for.
I'm disgusted by the banks' transparent attempts to make taxpayers shoulder the burden of their reckless greed now that it's time to pay the piper.
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