Glenn Hubbard, dean of the Columbia Business School and former chairman of the Council of Economic Advisers during the George W. Bush presidency,. recently urged that financial crisis interventions should not be limited to banks.
………………………………………………
*Bailouts Shouldn’t Be Only for Banks – WSJ
Wall Street Journal, 9-14-18 – Excerpts:
“To be sure, recapitalizing financial institutions was an important element of the policy response. The depletion of capital buffers before the crisis reduced loan supply and exacerbated fire sales of distressed assets once the market collapsed. Cash infusions by the Treasury under the Troubled Asset Relief Program, in concert with the Fed’s bold lender-of-last-resort interventions, blunted the impact of the crisis.
That said, the perceived lack of attention to “Main Street” fed public suspicion of the bailouts. The government appeared to be more interested in addressing the decline in bank capital than the decline in home values. Millions of homeowners who were current in their mortgage payments were unable to refinance at lower interest rates because they were underwater. Yet many of these mortgages were already guaranteed by Fannie Mae and Freddie Mac , meaning taxpayers held the credit risk. Banks and investors holding the mortgages would never receive less than par.
The government should have directed a mass refinancing of mortgages for primary homes in which the borrower was current in payments. This would have led to an increase in disposable income and in home prices totaling more than $100 billion, according to a proposal Christopher Mayer and I offered at the time. The Treasury instead offered a tepid version of this with the Home Affordable Modification Program and the Home Affordable Refinance Program. These initiatives lacked the boldness of the bank bailouts, and Americans noticed…”
_____________________________
Hubbard concluded, “Ten years on, the U.S. still lacks a detailed plan for postcrisis intervention…”
What America really needs, to restore financial health to working families and ‘power up’ economic vitality throughout Main Street America – is a detailed plan for ‘pre-crisis’ intervention.
America needs a comprehensive economic plan that will insulate Main Street America from the next financial crisis and generate massive new tax revenue flows with a powerful, sustainable reduction in government deficits.
America’s new economic plan is currently loaded up and ready to go…
The Leviticus 25 Plan – An Economic Acceleration Plan for America
$90,000 per U.S. citizen – Leviticus 25 Plan 2022 (3902 downloads)