Thomas James Hurst / The Seattle Times
Level the playing field
Editor, The Times:
Is there a hint of real change in the Senate bailout rescue plan? [“Senate revises rescue plan, will vote on bailout tonight,” Times page one, Oct. 1]
Under the new plan, the FDIC [Federal Deposit Insurance Corp.] would insure bank deposits for $250,000 rather than $100,000. This is official recognition that steroidal deficits and inflation have devalued U.S. currency.
Sen. John McCain and Sen. Barack Obama both urge the FDIC adjustment.
McCain has long proposed an increase in the income tax deduction for dependents from the current $3,500 to $7,000, a partial restoration of the $2,400 value in the middle of the last century.
In addition to similar tinkering with the minimum wage, might we hope for action on something even more neglected and basic?
Where is the balance between total federal tax revenues from personal incomes and the total net amount from corporate income taxes? Some budget gurus report that an earlier 60/40 split (personal/corporate) is today 100/0 after the collage of offsetting loopholes and incentives are factored in.
By comparison, earmarks are loose change. Real change would consist of re-leveling the playing field.
–Peter Beaulieu, Shoreline
Listen to Ramsey
Bruce Ramsey’s “Those troublesome financial facts” [editorial column, Sept. 30] is a reminder that the current turmoil in the United States is one of the major economic disturbances to have occurred throughout the world. England, Germany, Belgium, Iceland and Russia are cited as specific examples.
The Nikkei crash of 1990 had striking similarities to our current situation regarding obsession with low interest rates and real-estate feeding frenzy.
The magnitude of the $5.2 trillion Fannie Mae and Freddie Mac mortgage holdings can be appreciated by comparing them to $1.39 trillion in the M-1 (circulating) U.S. money supply. Fortunately only 15 percent ($780 billion) of those were risky loans. Bad mortgages can be backed by foreclosure of the hard asset of property.
The initial CRA (Community Reinvestment Act) of 1977 started the strategy of expanding homeownership, but the subtle and more profound effect of its revision in 1995 was coercion by regulation to provide loans to distressed communities.
The naive view that blames lack of regulation fails to see how laws to enhance “affordability” and strong-armed regulation that forced banks to provide mortgages in all neighborhoods actually created an unintended consequence beyond imagination.
Congress must repeal CRA, as it is one of the underlying “troublesome financial facts.”
— Gerald Yorioka, Mill Creek
Let’s be realistic
I am a firm believer that if you owe it, pay it and if you can’t afford it, don’t buy it.
I am tired of hearing from government officials that without the bailout “people won’t be able to get a loan for a new car.” People need to stop using credit to purchase things they don’t need and can’t afford [“Senate passes bailout; House feeling the heat,” page one, Oct. 2].
Kids need to get out and play “kick the can” and “hide and seek.” Their parents don’t need to buy them laptops, X-Boxes and TVs. These purchases may support the economy, but simultaneously put people into debt.
My grandparents had little money and raised three children in my great-grandparents’ basement during the Great Depression.
When we cleaned out my grandparents’ home after they passed on, we found a stash of new linens, socks, underwear, etc. that were given to them as gifts throughout the years. My grandmother once told me that they never wanted anything they didn’t have and had everything they wanted. They were happy living within their means.
Maybe this mess [bailout] is what we need to think realistically again.
— Michael Lang, Seattle
New bill is not so sweet
Beware of the Senate-sweetened bailout bill.
We still don’t see a requirement for troubled companies to obtain equity and now the bill is loaded up with irrelevant baggage that typifies Congress’ fiscal irresponsibility.
What does a requirement for group health plans regarding mental health or addiction benefits have to do with the financial crisis, let alone a renewable fuels tax break?
Let’s focus on what’s essential; think like Warren Buffett and strip out the extraneous.
— Mark Nassutti, Kirkland
Give houses to universities
One potential solution to uncollectable mortgages is for the banks to donate the houses to their local universities and colleges.
There is sufficient precedent for donation of real estate to educational institutions.
Usually, the donor lives in the home until his or her death, at which time the university assumes ownership and either rents it out or sells it. The donor takes a tax write-off and the university gets a long-term asset.
Banks could donate these foreclosed properties, take a tax write-off and enrich our educational system all at the same time.
— Katherine Reinleitner, Bellevue
Cantwell voted like a Republican
In the most crucial decision of her congressional career, Democratic U.S. Sen. Maria Cantwell voted like a Republican [“Senate passes bailout; House feeling the heat,” page one, Oct. 2]. She opposed the bipartisan plan intended to shore up the nation’s credit markets, choosing instead the kind of ideologically driven, do-nothing response that characterized House Republicans earlier in the week.
No one is happy about asking the government to bail out Wall Street. But virtually every reputable economist who has studied the financial crisis argued that Congress needed to act quickly to keep credit from drying up and stock prices from taking another swoon.
Both presidential candidates agreed that inaction would invite disaster. Congressional leaders from both parties warned of dire consequences on Main Street should the rescue package fail.
But none of that mattered to Cantwell — at least not enough to vote for the only politically viable rescue plan under consideration. In this most-critical vote, she decided ideology should trump pragmatism — even if it would cost her constituents their jobs and retirement savings.
— Randal Beam, Seattle
Murray disregarded her constituents
Democratic U.S. Sen. Patty Murray’s yes vote on the bailout bill is an astounding display of ignorance coupled with an unfathomable disregard for the welfare of her constituents. It was a slap in the face to all those homeowners in financial difficulty.
The Senate took the president’s bill, designed to protect the wealthiest 1 percent, and slapped $150 billion worth of pork into it. This pig has lipstick on it five layers deep.
We have a problem here. Many of our neighbors cannot meet their mortgage payments. Rather than helping those people out, Murray voted to shield the billionaires from realizing a loss. The poor guy still loses his house. That is profoundly unfair.
No matter how much saccharin and perfume the Senate has poured into this bill, it still stinks.
And Murray should know that.
— Art Valla, Kenmore
Do your part, consumers
In the desperate struggle to upright the collapsed economy, it is understandably hard to focus on the core of the problem. While the government is trying to prevent the impending domino effect, the consumers can do their part on the small scale.
Sometime soon, consumers should reject the constant future spending enabled by ATMs and raised credit limits, zero downs and offers like ” buy now, pay in two years.” Consumers should fight off new credit-card offers and the promise of rebates if they charge instead of use cash for their purchases.
It’s a cliche but rings true, once again: Consumers should buy what they can afford within their current income, not with future-speculated earnings. If this sounds like a credit reform and a movement to return to cash or check payment, so be it.
This, of course, will be a total setback for those who do not even recall the feel of real, hard cash or those who have not written a single check in the past decade. Consequently, the greedy mortgage lending industry will no longer have the demand for the unrealistic loan market and, thus, will cease its bad business practices to supply such.
The collapse occurred because of the supply-and-demand principle, and the fix should also be provided from both ends.
— Dee Tezelli, Seattle
Reduce national debt instead
I don’t really understand all the details, but, in my opinion, the bailout talk shouldn’t have ever been started.
It’s important for the current problems caused by overspending and risk-taking to be self-corrected, the lessons learned and, hopefully, we’ll all be more conservative in the future.
I think the government should concentrate on reducing the national debt. The easiest place to start is military spending. If we reduce our debt, it will help us be more competitive in the world economy and help us stay close to our current standard of living. Otherwise, we can’t compete.
— John Rodgers, Kirkland