So-Called Bailout Plans Myths are worth Pondering On

I am one of the few people who believe that the Obama housing bailout plan is a good opportunity to save the millions of homeowners who are currently facing foreclosure. The economic situation of the country is currently at its worse, and I think that giving homeowners like you and me the chance to modify our mortgage terms to become more affordable is a welcome relief. However, lately, a lot of issues have been springing up here and there doubting its effectiveness.

They say that the Obama housing bailout plan has a lot of ‘mythical’ benefits. Going through the countless of blogs online that talk about similar topics has got me thinking whether or not all of these benefits are truly myths—unrealistic—and are products of overestimation on the President’s part?

http://www.mediabistro.com/agencyspy/original/Foreclosure.jpg
Obama bailout plan

First of all, this new start is not as fresh as they want us to believe. How come they keep talking about new beginnings? It turns out that the idea of investing directly in banks to help them get through default loans and help with borrower credits was not an original notion. It is actually something the previous administration started.

Second, it seems that the problems will not go away with increased accountability as promised. Actually, asking banks for more accountability that get bailout funding is a great idea because people will be more confident in the government and the markets, that is, if done right. But one problem remains unsolved despite the promises of the state: many banks are still losing money which unfortunately inhibits their lending capabilities.

The third and most relevant myth of all is that this plan will actually stop foreclosure. After months of implementation, we are only provided with minimal results at best and foreclosure is still on the rise. The reason is because there are too many people (millions, in fact) at risk of or are already losing their homes, and these mortgages have become so complex due to broken components, bundled securities and the like. How can banks keep up with that?

You don’t necessarily have to believe it, but, like me, it would do you good to at least ponder on them.

0 comments:

Post a Comment