What the Bailout Won't Do

Like most Americans, I've been closely watching as our leaders discuss and debate this bailout. I watched and listened to most of the debate in the House on Tuesday, and will be watching the Senate debate today.

I keep hearing over and over again how we must do something; that the cost of doing nothing is greater than the cost of this bailout. But I would have to ask our honored members of Congress, what will the cost be for doing the wrong thing? Panic and fear can not, and should not, drive these decisions and actions.

We have some great resources out there to fix this that won't use $700 billion taxpayer dollars. The discussions on the House floor Tuesday posed some potential solutions that should, at the very least, be looked into, investigated, and debated. We need to find the right fix, or the right 25 or 50 fixes, whatever they may be. (One proposed solution was changing the mark to market accounting rules. Another was studying the obviously successful actions taken during the Savings and Loan crisis and modeling a solution on steps taken then.) But after all is said and done, if we do need to throw $700 billion at the problem, let's make sure it lands where it needs to.

This bailout does not guarantee against further job loss. It doesn't contain any type of layoff freeze and job loss is the proverbial horse that already left the barn. At the end of August, 9.4 million Americans were already out of work. The potential provision to extend unemployment benefits isn't going to solve this problem. It would only give some of these 9.4 million unemployed Americans a few more weeks to find a job. But jobs aren't out there to find and they aren't going to magically appear in just a few weeks because unemployment benefits were extended. If we could get these 9.4 million people back to work, they will be able to pay their bills and mortgages.

This bailout doesn't fix the credit crunch. The bailout might give some liquidity to lenders and banks, giving them breathing room to lend money but it doesn't say they have to lend it. They could certainly, and prudently, just sit on their suddenly freed up cash.

This bailout isn't going to help people who are struggling to pay their ever-increasing bills. Although the Senate version is supposed to include a tax cut for the middle class, I doubt it will be soon enough or big enough to ease the strain on already increased expenses.

And this bailout doesn't help homeowners facing foreclosure. Even if the final version includes renegotiating mortgages, the only mortgages that might be renegotiated are ones held by institutions that request help from the bailout.

Maybe lenders and banks wouldn't be asking for our tax dollars now, wouldn't be reaching for a handout, if they had reached a hand out to help the struggling American during the past year. If mortgage companies had agreed to a monthly payment less than originally agreed to, maybe they wouldn't be sitting on a totally defaulted mortgage now. Maybe credit companies wouldn't be crying now if they hadn't raised interest rates to absurd amounts under the now notorious "general default" rule?

These lenders gave Americans no relief or understanding when their personal circumstances changed (job loss, health problems, etc.) or when American monthly budgets became strained due to rising food and gas prices. They didn't come running to bail out the struggling American; they continued to compound the problem. Yet Americans are being asked to ride in like the Calvary to save these lenders.

Instead of our Congress asking us to pony up $700 billion, maybe they should force all lenders to renegotiate any and all foreclosures and force credit companies to roll back, retroactively, any and all interest rate increases to pre-default levels and keep them there.

But finding the best solution isn't going to happen overnight and our fear and panic to find it rises and falls with the roller coaster stock market. After 9/11, our stock market closed because we had a national crisis. We now face another national crisis and we need time to solve it.

Close the stock market again. Let everyone take a deep breath. The stakes are high and there has got to be a better solution. I think we, as a country, need to take the time to find it.