OK, here's something I received in an email today.

I'm not going to say where it came from because I know that there are some on this board that would fault it just knowing who originated it.

I don't know if this plan would work for sure on not, but it sounds like it would.

I'm throwing it out for discussion. What do you think?

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Years of bad decisions and stupid mistakes have created an economic nightmare in this country, but $700 billion in new debt is not the answer. As a tax-paying American citizen, I will not support any congressperson who votes to implement such a policy. Instead, I submit the following three steps:

Common Sense Plan.

I. INSURANCE

A. Insure the subprime bonds/mortgages with an underlying FHA-type insurance. Government-insured and backed loans would have an instant market all over the world, creating immediate and needed liquidity.

B. In order for a company to accept the government-backed insurance, they must do two things:

1. Rewrite any mortgage that is more than three months delinquent to a 6% fixed-rate mortgage.
a. Roll all back payments with no late fees or legal costs into the balance. This brings homeowners current and allows them a chance to keep their homes.
b. Cancel all prepayment penalties to encourage refinancing or the sale of the property to pay off the bad loan. In the event of foreclosure or short sale, the borrower will not be held liable for any deficit balance. FHA does this now, and that encourages mortgage companies to go the extra mile while
working with the borrower—again limiting foreclosures and ruined lives.

2. Cancel ALL golden parachutes of EXISTING and FUTURE CEOs and executive team members as long as the company holds these government-insured bonds/mortgages. This keeps underperforming executives from being paid when they don’t do their jobs.

C. This backstop will cost less than $50 billion—a small fraction of the current proposal.




II. MARK TO MARKET

A. Remove mark to market accounting rules for two years on only subprime Tier III bonds/mortgages. This keeps companies from being forced to artificially mark down bonds/mortgages below the value of the underlying mortgages and real estate.

B. This move creates patience in the market and has an immediate stabilizing effect on failing and ailing banks—and it costs the taxpayer nothing.




III. CAPITAL GAINS TAX

A. Remove the capital gains tax completely. Investors will flood the real estate and stock market in search of tax-free profits, creating tremendous—and immediate—liquidity in the markets. Again, this costs the taxpayer nothing.

B. This move will be seen as a lightning rod politically because many will say it is helping the rich. The truth is the rich will benefit, but it will be their money that stimulates the economy. This will enable all Americans to have more stable jobs and retirement investments that go up instead of down. This is not a time for envy, and it’s not a time for politics. It’s time for all of us, as Americans, to
stand up, speak out, and fix this mess.

good idea. most people don't know that it is the small investor that gets hosed by capitol gains as well. small investors could create wealth faster without CG taxes. and more money for investing. The hate anyone who makes a buck crowd would not like this. there to busy buying big screen tvs and new cars instead of bettering themselves.

There is nothing wrong with having that stuff so long as the necessities are not overlooked especially when children are involved.

In my book 52" Plasma is bettering than 36" analog. I will have one some day when the kids are done draining the bank of Mom & Dad.

My five gallon water bottle should be full of change by then so i'll just plop that down at the check-out counter! Hope they still take pennies when that day comes!

Well, the Senate , which has mostly growups running the place, unlike the House, and I emphasize mostly , is drafting a modified Rescue Bill. It will be voted on tommorow and passed. It will be presented to the House on Thursday, and voted on and passed by the House this time.

"I will have one some day when the kids are done draining the bank of Mom & Dad."

Darko, when does that day come? I'm still being drained, and my youngest is now 21!

So, we went ahead and bought the damn TV so we could at least watch it a few times before we die...

This common sense fix is from Dave Ramsey, who quite often, gives out bad and unrealistic advice. The main problem with his plan is that many people would still not be able to afford their mortgage at 6% using FHA underwriting guidelines.

As for capital gains, if you are paying capital gains taxes, YOU'RE MAKING MONEY! Eliminating captital gains would be a windfall to the rich, create even more inequity in the market, and increase our deficits.

Personally, I would favor the government buying up all the bad assets at fire sale prices which would increase liquidity in the credit markets. Remember, these bad mortgages are tied to real assets, and over time, those bad assets will recover and it's my belief that the government could actually make money at the end of the day.