What's In It For Me?

$13 (Thirteen dollars)

Yeah, I know I'm selfish, but you're probably thinking the same thing.

What's in it for me?

I'm still wrestling with all this financial information, job-loss stats, market data and the ginormous stimulus figures that are being tossed around so nonchalantly.

It's almost in comprehensible. Everywhere I turn there is talk of the stimulus plan, Congressional in-fighting, President Obama, and "the worst financial crisis" since the Great Depression.

$789 Billion that should be able to solve a lot of problems, but what's in it for me?
One version of the plan called for up to $830 Billion. Where's the other $41 Billion? Does that mean that some problems will not have a resolution?

I mean really, a couple of months ago President Bush gave $350 Billion to U.S. banks to unfreeze the credit markets (T.A.R.P. money), but it hasn't trickled down to those that need it most - homeowners in jeopardy and those holding notes backed by their loans. I've looked at what the Wall Street Journal, the Washington Post, and the Financial Times have written over the past couple of days and it's still not clear. I honestly don't have time to read all 300+ pages of the bill, so I'll have to guess what will come out of it like everyone else.

What I gather is that lawmakers in Washington and bankers on Wallstreet are all playing guessing games. Lawmakers are guessing that if we print more money, offer minor tax breaks ($13 more dollars in your take home pay weekly), and confuse the public that this problem will resolve itself. Bankers are guessing that if they make some concessions (giving up the million dollar bonus) to Congress, that they'll get more money to line their pockets and not lend to the public.

Truth is, this financial crisis is not a simple problem, however, it can be solved over time if we attack its root. Outside of sheer corporate greed, the problem facing America originated in the housing market - which has essentially been left out of all discussions regarding this stimulus plan.

It's like getting your teeth whitened to cover up your cavities.

Perhaps I'm wrong, but the only things I see in this stimulus bill for troubled homeowners is a $7,500 credit for new buyers and the promise from the nations largest banks to hold-off on all new foreclosure proceedings for three weeks. That might help some, but not enough to lift the economy. What about those homeowners who are under water and looking to refinance?

Let me offer my two cents.

1) The average U.S. mortgage is $1,295. If you tripled that, you're looking at $3,900. There are currently 1 million homeowners in jeopardy of losing their homes.
Why not cut them each a check for $3,900 - which would cost only $3.9 Billion. Why not make this a loan payable over 10 years to the federal government equivalent to the current 10-year Treasury note? Couple this with a refinancing credit of $1,100 to the banks holding notes from these homeowners and a three month moratorium on foreclosures and this should solve the problem of 1 million households. At today's (2/12) 10-yr treasury note rate of 2.73, the governments outlay of $3.9 Billion would generate $37.17 x 1M monthly or nearly $4.5 billion over 10 years.

2) There needs to be some sort of reform on how house values are calculated during this economy. The current comparative-pricing concept used by appraisers does no service to the homeowner in need of refinancing in this market. Perhaps a replacement cost approach similar to those used by insurance companies might work better to stabilize pricing.

Of course this doesn't solve overlying economic issues, such as unemployment, social security, and market confidence, but in my defense, I'm not an economist.

Sorry to get so technical on this, but if those in Washington and on Wallstreet are guessing, I might as well do the same.

For now, I can't wait to spend that extra $13.

-whatdabusinessis.com