Thought experiment
DISCLAIMER: I don't have all the details, this is going mostly off of memories of headlines.
Set-up:
As I recall the 2008 Crash started by mortgage backed securities failing when people got foreclosed on; (nuance obviously for NINJA loans and multiple mortgages on the same property, I did see "The Big Short")
I've heard it said that the U.S. government paid more in bailouts to the banks than the value of the foreclosed mortgages.
No judgement, no fairness being brought into it, just looking at numbers.
Thought experiment:
What would have been the result if instead of bailing out the banks, every mortgage in foreclosure was paid off?
Additional thoughts:
Ways to have made it more "fair"; as the borrower you had to agree to let the government pay off the mortgage; part of that agreement was community service. The scheme would look something like:
You owe 5000 hrs of community service for every $200k of mortgage that you were bailed out for and you have 10 years to pay those hours. That values the person's time at $40/hr and builds up community.
So say someone took $400k in forgiveness, they now have 20 years to work off 10000 hours of community service at a minimum of 500 hrs a year. That's 10 hours a week you have to work to live in a house that's paid off.
I dunno, just thoughts.
Posted by RudeSchedule932
1 Comment
The government actually made a profit from TARP (the bailout). The bailout isn’t giving away money for nothing – the government bought those troubled assets from the banks and financial institutions. As it turns out, these assets weren’t actually as troubled as it seemed – people continued to pay off their loans etc. So they had some value and that value, all said and done, was more than what the governments bought those assets for.
And there is a name for what you’re suggesting – it is called indentured servitude and that is not a practice that should be revived. People and businesses are allowed to declare bankruptcy and extinguish their debt.