Economic Troubles: The Government Offers Plans of Resolve
High foreclosure rates, talk of recession, it seems like there is nothing but doom and gloom in the news today concerning the economy. But alas there is hope coming in the form of our government and as fate would have it, this happens to be election time.
Majority Democrats want the government to get involved by backing up to $400 billion in troubled loans. The goal is twofold: First to help strapped borrowers and also to thaw a credit market plagued by uncertainty about the value of subprime mortgages that were issued to individuals with spotty credit or low income.
Interestingly, the republicans don’t share the democratic view of economic resolve. In his speech delivered on the 25th of March, Senator John McCain argued against a more expansive role for the government in dealing with the economic crisis. While the candidates themselves argue about the best means for recovery, the current body of leadership has issued its own proposal.
Issuing the most radical proposed overhaul of financial oversight since the Great Depression, the Bush administration has fired up a fierce debate by pitting those eager to revamp an antiquated system (such as plans proposed by the democratic candidates) against an industry that has been typically opposed to excessive regulation.
The plan, set to be released tomorrow is quite well aware of the current situation which has meant billions of dollars of losses for banks and investment firms, the near-collapse of the country’s fifth largest investment bank, made it harder for individuals and businesses to secure loans and has pushed the country to the brink of economic recession.
In addressing these issues, the plan is calling for the greatest alteration in financial regulation since many of the current oversight institutions were created in the 1930s. So what then is the debate about? Many experts in the financial industry are concerned that Congress could use the situation to rush in to legislate & regulate. Opponents to the proposal fear the government may use the current unstable economic conditions to grant themselves regulatory power that may remain long after the economy recovers. Whether or not these accusations prove true will remain a mystery until after the plan is released.
