October 13th, 2008
Was the Bailout Too Costly?
According to numerous sources at this point, the recent bill to bail out the financial sector was simply too costly, and failed to adequately address the true housing crisis. Many people have opposed the bailout bill because it is failing to do anything to help unemployed workers and homeowners.
According to Senator Debbie Stabenow, “I absolutely believe that this is serious and real and has to be addressed.” She said regarding the $700 billion bailout plan, “But $700 billion is a lot of money, and it did not go over the heart of the issue, which is fixing the housing crisis and creating jobs.” She was quotes as saying in a recent phone interview.
According to Stabenow, 99 percent of all the people who are speaking out about the bill are opposing it despite the fact that it recently passed. The $700 billion dollar bailout bill was passed through legislation last week, allowing the government an opportunity to spend as many as $700 billion dollars to buy off bad mortgage security as well as other devalued assets that are being held by the troubled financial institutions and banks. The legislation was initially sought in order to help credit flow again, preventing a serious economic downturn from occurring.
According to Stabenow and other officials, there are less expensive and more targeted approaches that have been presented that are much more persuasive, despite the $700 billion bailout bill having passed recently. For example, Dan Gilbert recently created a $50 billion dollar proposal to subsidize interest rates on sub-prime mortgage loans and other risky mortgages with adjustable rates, converting them into fixed rate, 30 year loans with lower interest rates. Under such a plan, the government would write down the loan to the true value of the home, subsidizing the homeowner’s interest rate for as many as six years.
Many people are disappointed that the senate did not approve the $61 billion dollar economic stimulus plan, which would have significantly boosted public works projects as well as extended unemployment benefits for workers having trouble finding employment. Similar provisions would have been significantly more effective to deal with the financial crisis according to many experts like Stabenow.
Industry officials in the automotive industry have sought a financial rescue package during tight credit markers because many consumers have been limited in their ability to get car loans. Numerous large scale automakers and dealers like General Motors Corporation, Ford Motor Corporation and Chrysler LLC have all posted steep declines in their sales during this industry-wide slowdown because of a slugging economy.
Many leaders in the automotive industry are saying that they were looking for such a financial rescue plan, but the senate did not seem willing to approve one. When Senate got behind the bailout plan instead, the automotive industry was desperate to be included but it looks like automotive financing options are being left completely out of the $700 billion dollar bailout plan despite desperately needing the assistance just as much as other financial companies.
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