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Rescuing Wall Street to Save the US Economy - Neither Fair Nor Effective Ed Paisley of the Center for American Progress shares his thoughts on the unprecedented economic bailout being planned by the federal government. Unless U.S. Treasury Secretary Henry Paulsons first stab at a $700 billion rescue of the global financial system is revised to incorporate restructuring troubled mortgages, it will be neither fair nor effective. Paulsons draft legislation attempts to rescue the balance sheets of Wall Street but does almost nothing for homeowners on Main Street. Thats a fundamental flaw. The U.S. housing market won't recover without restructuring of underlying mortgages that are troubled. Global credit markets will not respond to this exceedingly expensive plan unless we get our fundamentals right. Moreover, taxpayers will be saddled with increasingly worthless paper as many of the underlying mortgages fail. The Paulson plan demonstrates a disturbing disconnect between the mortgage-related assets that taxpayers $700 billion is being used to purchase and the necessary restructuring of the troubled mortgages themselves. Many hard-working Americans are having trouble paying on their mortgages, which in turn is driving down the value of their neighbors homes across the country. Tens of millions of families have seen their home values plunge through no fault of their own. Nearly 1 in 10 American households—roughly 5 million—have a mortgage that is either in default or facing foreclosure. These are the families still struggling to pay their mortgage even after the earliest subprime borrowers have already lost their homes. Without provisions expressly aimed at helping these borrowers restructure their mortgages with the assistance of the federal government or through judicial modification, this grand plan to buy "toxic" assets from the financial institutions that engineered this market meltdown will not help the U.S. housing market recover. The Bush administration, however, is ...
Length: 02:59


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