|
step one: authorize no more than $100 billion to bernanke/paulson to buy up subprime mortages along the lines of what they proposed. i don't like their scheme, but this buys time to turn the vague proposal into something that looks like proper legislation.
step two: immediately freeze upward rate resets for those at risk of default on their mortgages.
step three: draft legislation authorizing the remaining $600 billion, but with significant restrictions about how it is to be spent, along with several other features:
a) establish a "too big to fail" bailout fund, paid for through a surtax on any company deemed too big or too significant to fail. companies can avoid the tax by splitting up if they wish. the fund would be used to bail out companies who have been on the too big to fail list for a least a year. bailouts would not be forthcoming to those not on the list.
b) establish federal regulations, with teeth, to ensure that mortgages are not deceptively marketed to home buyers or to banks or to funds.
c) greater financial disclosure of all financial companies, including hedge funds, pension funds, and trading companies, as well as greater financial disclosure of all public companies' financial holdings (e.g., oil companies' futures trading activities)
d) provide that the remaining $600 billion be used only to purchase subprime mortages, and that, for any subprime mortgage steps be taken to help borderline homeowners to stay in their homes, via limited interest rate reductions and/or principal forgiveness. this is not if foreclosure is rather likely or rather unlikely regardless, this is only in cases where it is likely to make the difference between foreclosure and not.
e) recoveries from the fund (regular mortgage payments and foreclosure proceeds) go to pay down the national debt.
f) all the restrictions apply to the original $100 billion and whatever was bought up with it as well.
g) establish that how the money is spent IS subject to oversight and court review.
i'm sure there are a few other appropriate criteria to add, but it's a start.
|