Over the last few months we have handed over to the banks literally hundreds of billions of dollars. We've given them that money with little restrictions on what they can do with it. With that money they have purchased private jets, handed out bonuses, hosted lavish conferences, remodeled their offices, and bought new homes. Meanwhile, the people of the United States have received little or nothing more than mortgage assistance. Why not bail out the people of the United States at the same time we bail out the banks?
One of the largest issues affecting the people of our country is the amount of debt that we are carrying. This large amount of debt is preventing many people from spending any money. In fact it is driving many people into bankruptcy where, since the law was changed in 2006 disallowing the discharge of unsecured debt, debtors are required to begin payments to pay back their debt. These payments will eat up any disposable income these people may have for years to come. Meanwhile, they sit as liabilities on the balance sheets of hundreds of banks. CITIBANK is an excellent example of a company that has literally hundreds of BILLIONS of dollars in balances on credit cards sitting on their balance sheets. What if there was a way to bailout Citibank while also bailing out people?
The money being given over to Citibank, BofA, Wamu, etc is all taxpayer dollars. It is money we have all paid out of our earnings to cover the common expenses of our country. Why not use that money to benefit the people that are providing it? What I am proposing is to use these taxpayer dollars not to provide free and clear bailouts to banks, but to pay off the debts of American citizens.
This tactic would achieve 3 things.
- It would provide cash capital directly into the bank, immediately.
- It would allow the bank to clean up its balance sheet by lowering the amount of outstanding receivables. Consequently it should free up dollars for additional loans.
- It would free up money in the budget of the American people. For many people they are so deep in debt that they have to penny pinch just to make ends meet. They do not have money to spend on consumer goods, services, eating out, or even a small vacation. By freeing them from the burden of their debt they are more able to spend their money on whatever they want, money that flows back into the economy.
This is very similar to the idea of Bush's from last year when he gave each of us up to $600.00 but it is a bit more developed. The money would not flow directly to you in the form of a check or a rebate on your tax refund. It would go directly to the banks. The difference is though that in exchange for that money, the bank would be required to lower each person's balance. Now I know that not everybody carries debt, but most do. Some might end up getting more debt paid off then others, but wouldn't that be better then just giving money directly to the banks that caused many of these problems in the first place?