...as losses from bad mortgages and mortgage-backed securities climb past $200 billion, talk among banking executives for an epic government rescue plan is suddenly coming into fashion.
A confidential proposal that Bank of America circulated to members of Congress this month provides a stunning glimpse of how quickly the industry has reversed its laissez-faire disdain for second-guessing by the government — now that it is in trouble.
The proposal warns that up to $739 billion in mortgages are at “moderate to high risk” of defaulting over the next five years and that millions of families could lose their homes.
To prevent that, Bank of America suggested creating a Federal Homeowner Preservation Corporation that would buy up billions of dollars in troubled mortgages at a deep discount, forgive debt above the current market value of the homes and use federal loan guarantees to refinance the borrowers at lower rates.
“We believe that any intervention by the federal government will be acceptable only if it is not perceived as a bailout of the bond market,” the financial institution noted...
"Bailout" might imply that in one fell swoop Bank of America takes home more money than has been spent on all the welfare queens for many, many years.
Unfortunately it's not an economic fix either.
A real economic fix would involve stringently regulating the Ba$e, the banks, the hedge funds, the bond market, and the stock market.
A real economic fix would create enough government jobs to completely take the wind out of the recession and fix the crumbling infrastructure of this country.
A real economic fix would involve shutting down expeditionary wars that are black holes in the Treasury and eat uncountable human lives to profit only the Ba$e.
A real economic fix would generate science and engineering funds to work out economically feasible alternatives to unsustainable fossil fuels that only serve as an exponentially increasing drag force on the economy and cash flow into the coffers of the Ba$e.
But any solution that leaves the predators to run loose to blow another bubble spinning Ponzi schemes to entrap the rest of society is just what the Ba$e is looking for.
If the corporate thugs pull this one off, look for a Republican appointed government agency to administer it that makes the Internal Revenue Service pale by comparison.
Look for draconian penalties that rank as Federal crimes, and debtor's prisons to spring up everywhere.
Run by the private sector, of course.