Friday, September 26, 2008

The Bailout

Okay, so I'll admit that I hadn't really stayed up to speed on the whole bailout deal. Then I started reading articles and listening to Dave Ramsey. If you were like me and didn't follow the whole bailout here's the quick summary from Ramsey's website:

Companies that had billions in subprime loans were feeling the effects of their stupid decision to make those loans in the first place, and practically gave them away for pennies on the dollar. But since no one wants these loans, and they've had to mark them down to market value, it has frozen the market. If we temporarily change the rule that forces companies to do that, that will free the market up.

Go here and see what Ramsey has to say about shaking things up with our Congressmen. Merrill Lynch was sitting with $30 billion tied up in sub-prime loans with houses. Personally, I think they were stupid to do that, but I'm just a stay at home mom so what do I know right? Granted, I would rather see the bailout of some sort than everything going topsy turvy on us. Ramsey says:

Why don't we just take the FHA insurance program and extend it across these sub-primes? What that means is that you and I are guaranteeing the lender that they're not going to lose as much or any money on those mortgages. Now I don't like guaranteeing them, but I like it better than buying them. In other words, instead of $700 billion in tax-payer debt going out there to bail out these companies, just extend the insurance out. You could probably do that for less than $40 billion. It's like a 95% savings!

I gotta say...I agree whole-heartedly with Ramsey on this. Only time will tell what's gonna happen. The next couple weeks will be interesting.

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