Bailout Crisis Needs to Help Main Street

I have stood by and listened to all the rhetoric over the bailout plan and want to give our Representatives a chance to help the American taxpayer, instead of just using us as additional collateral for this $700 billion loan to the government. It should be noted that I do believe we should pass a plan because it is the right thing to do and the Government will make money on this deal. However, we need to take significant actions that will not only help stablize our banking system but help bring the consumer back to the cash register.


I understand the reluctance by many of our representatives to pass this bill; however, I believe they should consider the following as an option to be added to the Senate approved bill so that we can sincerely help the American people and not just Wall Street. Here is a summary of the very real solution that would bring Main Street to Wall Street! My plan is that we simply let Paulson execute his plan (with the added Slyman Plan option). We all know that the government will be funding the purchase of these mortgage backed securities at 20-50% on the dollar. This will take these securities off the balance sheets of the financial institutions that have purchased them and provide the needed liquidity to restart our banking system. In turn, with my plan, Paulson and team will send letters to the Main Street (homeowners) and offer them the opportunity/option to purchase their own mortgage(assuming it is included in one of the government purchased pools) back from the government at a 10-15% premium over the government's purchase price of their individual mortgage. This would allow Main Street to reduce their mortgage by anywhere from 35-65%, creating an instant market/exit strategy for the Government. The premium over the government purchase price would cover those mortgages that may be troubled and reduce or eliminate any potential loss to the taxpayer. Any residual mortgages left in the government purchased pools would be the truly "Sub-prime" or "distressed assets". These assets could then be sold to the newly created Wall Street Funds at a significant discount, taking the government out 100%. I believe every American would agree that given this option, individuals currently paying their mortgage or those that just stopped paying due to their teaser rate being adjusted to market rates, would not turn this type of offer down. This is a true win/win for the government and the taxpaying public. It would be an instant economic stimulus and the catalyst to getting America out of the housing crisis. The reluctance by the Senate and Congress to pass this bill would go totally away, due to the fact that their constituents would no longer feel like the government is spending taxpayer money without a true exit strategy. The new and improved fail safe exit strategy will be to help the American taxpayer reduce its current mortgage debt, which in turn would generate the needed funds for repayment of this bailout plan. Politically, I believe each party would be off the hook! The smart money knows that 87% of the sub-prime mortgages are current, so with only 13% in the non-performing category, this plan would make the treasury money and make Main Street (homeowners) with mortgages in these government pools very happy. In fact, with this approach, I believe many of the non-performing mortgages would now be at a manageable level for those that got behind, because their mortgage would now be 30-50% lower than the original mortgage. This would include those that couldn't make the adjusted payments due to the increase from the teaser rates that got so many Americans into trouble. These Americans would now be able to manage the payment and stay in their homes, reducing the rate of foreclosures tremendously. After all, why should we give those that the American taxpayer considers, Wall Street, the opportunity to profit from dumping these mortgages on the government. Instead of having Wall Street turn around and start new distressed asset funds to purchase these mortgages at some small rate above the rate at which they were sold to the government, we need to help Main Street stay in their homes by allowing them the same opportunity to repurchase their own mortgage from these government acquired pools. Any IRS gain that would be generated from a reduction/forgiveness of debt needs to be waived in this case. I respectfully submitted this plan (The Slyman Plan) for your consideration and hope that you will introduce this into the bill and work with our representatives to move this great Country forward.