The following is an idea I had today about a possible alternative to the current proposed bank bailout resolution. I'm not an expert in economy or banking by any means. I don't know if something like this is really feasible or not. If it is a good or bad idea, please let me know and tell me why. Thank You.
There are many people who oppose the presidents 700 billion dollar bailout resolution. Whether for or against it, most seem to agree that there is immediate need of a short term resolution, in addition to a long term resolution.
According to the president, the short term solution is to get banks to loosen up lending which will kick start the engine of our stalled economy. His method for doing this is buying up toxic securities from irresponsible, greedy financial institutions that chose to bank their money on the obviously corrupt real estate market. Why do we insist on rewarding irresponsibility and greed by negating all consequences?
It would be far better to enact a plan that will loosen up financial lending while benefiting and educating the American public at the same time. I propose a 700 billion dollar compulsory savings credit to be deposited into tax payers savings accounts. Divide 700 billion dollars 138 million ways. This is roughly 5000 dollars. Deposit this amount into each tax payers savings account of their choosing. Prohibit any withdrawals or transfers within the first year. Provision a plan to reward tax payers that choose to keep this savings credit in their accounts beyond the first year. A higher return on interest for taxpayers that maintain the account for 2, 3, 4 and 5 years.
This cash influx to banks balance sheets should lower their risk factor and free them up to start extending credit to American businesses and families that need it. The required one year deposit will lend us time to craft a long term resolution and update financial regulations. In the end the $700 billion supports the economy and never leaves the tax payers pocket. Saving habits are formed for millions of people that have become used to living on the edge.
Troubled financial institutions should be allowed to bear the burden of the toxic securities instead of the American tax payer. Please allow them to take responsibility and face the consequences of their actions. Resourceful banks will find a way to turn things around. Those that don't should be a allowed to fail.