This is certainly not the fault of Republicans as a party. It's easier to blame the Democrats when you look at the real facts. They were lauded for defending Fannie and Freddie 3 years ago when Republicans tried to reform them.
But the simple fact is both parties let it slide, and thus are both stupid. The other simple fact is that some banks in the past few years have already gotten rid of the "toxic assets" that the government claims they need to buy. Yes, they sold them for 22 cents on the dollar. That's business. But other banks are now holding onto them because the government will probably pay them 60-80 cents on the dollar with this plan. They're just waiting it out.
I approve of this plan that was posted earlier in the thread:
http://www.daveramsey.com/media/pdf/the_common_sense_fix.pdf
Subprime loans were banks' way of sustaining the big money they made during the dot-com boom. They would have worked if house prices kept going up, but this is a stupid assumption. Nothing goes up forever, and the huge number of new buyers eventually ran out, causing prices to fall. When prices fall, you can't refinance, and most subprime loans were built assuming that they would refinance because they could not afford the rates they were given.
The Mark-to-Market rules are creating a huge issue that is totally unnecessary and changing that would've avoided most of this trouble. Because no one can sell these mortgages, they have no value, even though they technically do have value, and it is messing with bank's abilities to carry enough value. A change here stabilizes the system big-time. It's complicated.
Taxes are the single biggest impediment to investment. Get rid of taxes short-term and we will see growth that no one has ever seen before, basically solving the crisis on it's own.
We can choose. This plan? Or a 700 billion expenditure of taxpayer (our) money that increases inflation and has no guarantee of success.
Sigh.
