Update: This article was written several days ago and Congress has since passed the now $850B Bail-Out Bill.

So which is it? Last evening, 10/1/08, the US Senate voted to approve a new version of the $700B Bail-Out bill for Wall Street. I’m not impressed. Yes, they would like you to think that this bail-out is for Main Street, but that is just simply not the case. If it were truly for Main Street, the people, then there would be more in the way of benefits for the consumers.

While the Senate’s bill is slightly better than the House’s proposal, it doesn’t do enough. As a Realtor®, I’m supposed to be thrilled and support this bill. I simply can’t do so in all honesty. While this bill might be helpful in the short term for us, there are long term effects that need to be addressed and taken into account. I’m not going to go into those for the sake of this article.

This bill is a bail-out of Wall Street – of the lenders, of the investment houses! If it were for the people, then there would be more safeguards imposed and more consumer benefits. There are just not enough provisions for such in this bill. There are too many homeowners losing their homes, but the lobbyists work for big business not the small consumer. Of course, that’s what we thought our legislators are supposed to be doing, but maybe you should check and see whose financing their campaigns. (Campaign Contributions – Who’s in Whose Pocket?)

The main reason that the bill did not pass the House of Representatives the first time around is because too many of them are up for reelection and the public view of these bills has been somewhat negative. Probably for two reasons: 1) There is too much information to swallow in just a short period of time; and, 2) The American public is not as stupid as they would like you to believe.

No matter how you slice it, the trouble that we’ve gotten into is due to corporate greed. Yes, you’ll hear the argument that people made bad decisions. I won’t deny that many did, but on the other hand, many were given erroneous information and basically sold a bill of goods.

But Corporate American saw the income potential with risky subprime loans – it was like manna from heaven. But it wasn’t – it was pure and excessive greed! The American Heritage Dictionary definition of the word “greed” is “An excessive desire to acquire or possess more than what one needs or deserves, especially with respect to material wealth.”

I think there is no doubt in anyone’s mind in regard to this. That’s why you are seeing an uproar to our bailing out Corporate America at the American taxpayers expense. Now don’t get me wrong, I do believe that something needs to be done. We need to stop this cycle. We need to not put a bandage on the problem, but to find a solution to what ails us. And, yes, we need more regulation of our banking system, something that was systematically eliminated during the 80’s. Remember, the Savings and Loan Debacle? Well, we’ve stepped into a major pile and it stinks!! But hey, let’s bail out corporate America!

And when you talk about deregulation, let’s not forget that our government allowed these financial conglomerates. There used to be laws separating savings and loans, investment banks, commercial banks and insurance, but these were torn down. Why did this occur? Oh let’s see – LOBBYISTS!?! Oh yes, and Corporate Greed!!

The arguments are vast in that this is the cure-all, but all we’re doing is subsidizing our financial institutions. Will this effect mortgages – probably not. But it will effect investors with the buying of mortgage baked securities. Oh geez, that really helps the family losing their home!

We need to help the people who are losing or have lost their primary residences. The financial institutions should be required to renegotiate mortgage terms instead of allowing them to just ‘voluntarily’ do so. $700B will go a longer way in helping consumers as opposed to the institutional giants.

We need to alter our bankruptcy laws allow judges to be able to alter loan terms. This is surely not something new, since they had this available to them pre-1978 when the laws were changed.

Yes, I know the argument in regard to why should all of these people that have paid their mortgages on time, etc. be responsible and pay for this? I’ll be honest, I don’t know the answer to that question. But something has to be done. The financial institutions will and should work this out as the housing market will do the same. Government is intervening in the wrong areas, as it unfortunately does all too often. But then again we have to go back to what I said earlier – looking at whose financing these campaigns.

We can’t just hope for a better system, we have to make sure that happens! We can’t be apathetic to what’s going on, otherwise you have no right to complain. It is up to us to work this out. It is up to us to make this a better place for future generations, because the legacy that we’re leaving them right now is not all that rosy.

See you next time around at Marc’s Corner!