Why is There Help for Banks But Not Homeowners?
Americans want to know why the big companies that financed their homes and repackaged the debt into securities can simply take writedowns, and watch the value of their shares drop temporarily, while so many people are losing their homes.
Most of all, they want to know why the Federal Reserve is rallying to help the banks, while leaving individuals to suffer the consequences. After all, it was former Fed chairman Alan Greenspan who once urged homebuyers to take advantage of adjustable-rate mortgages.
The latest plan from Greenspan’s successor, Ben Bernanke, is to allow Fannie Mae and Freddie Mac to guarantee "jumbo" loans (those bigger than $417,000) so the lenders can keep on lending.
A bill introduced in Congress that would actually provide some relief to homeowners has provoked the wrath of the banks.
The concept of "too big to fail" has been with us for a while. Americans have accepted that the Fed will bail out those who make really big mistakes that could impact the entire economy. The airline industry got a chance to "restructure" through bankruptcy and is still flying. Even Donald Trump could "restructure" through bankruptcy and today hosts seminars on how to create a fortune.
Are we, the general public, missing out on something? Why can’t the millions of homeowners facing foreclosure simply "write it off" and continue to live in their houses? What’s wrong with this picture?
Anyone else upset over what seems to be taking place with this Federal Bank Bailout plan while millions of homeowners take it on the chin? Leave us your comments or thoughts on this. We’d love to hear from you!