Senate Passes Bailout Package. Doesn’t Help Mortgage Loans.
Last night, the Senate passed its version of the $700 billion bailout package. Bible Money Matters conveniently summarizes the three main changes the Senate added to the bill:
- FDIC limits raised to $250,000 from $100,000.
- Business tax breaks extended, and middle-class gets protection from alternative minimum tax.
- Health insurance companies have to provide coverage for mental health issues.
Obviously, with Main Street in an uproar over the bailout package (and the House left with no choice but to defeat it), the Senate is trying to provide a sop. But, unfortunately, none of these things does anything to address the ways in which Main Street is affected by Wall Street.
Well, I take it back. The bailout package may save some jobs, since some companies may not fail and have to cut back. The other two issues, retirement and mortgage loans, remain untouched.
Really helping Main Street
While the items included in the new version of the bailout package are nice, I suppose, they don’t address underlying issues: unaffordable mortgage loans and diminishing returns in retirement portfolios (unless the package really does boost share values).
- Dave Ramsey thinks that companies that take advantage of government help, they should refinance mortgages that are delinquent at a 6% fixed rate. This would help many of those whose mortgages have reset to higher rates, and make payments affordable by offering a lower rate — and by refinancing the amount owed out over 30 years. This could save many (but not all — some people still won’t be able to afford the mortgage) from foreclosure.
- I would like to see limits to contributions to tax-advantaged retirements accounts lifted. If I could put $10,000 into my Roth IRA each year instead of $4,000, that would be great. It would help my long term future AND is would encourage increased investment.
I would also like to see our leaders begin emphasizing good financial behaviors, rather than telling us how important it is for us to be able to borrow more money that we can then spend on things we don’t really need.
CNN Money offers a PDF of the full text of the Senate bailout package.
Tags: mortgage loans, Senate bailout package, home mortgage loan, Roth IRA,
Dave Ramsey, FDIC, retirement accounts
