The Crisis on Wall Street -- and Main Street

Monday, September 22, 2008

The housing bubble is at the root of our financial disaster, which our government has intensified by creating panic through rescuing some financial institutions but not communicating whom it will next support or how.

The short-term anxiety will subside if the market sees a robust plan to stabilize the long-term problem: How do we put a floor under the housing market? The solution is ensuring that subprime mortgages perform and buyers have access to new mortgages.

We must provide low, below-market, fixed-rate loans at around 4 percent either directly to home buyers or through mortgage lenders. The terms should include no second mortgages or home equity lines of credit and allow for a staggered conversion to market-rate interest at some point.

We need swift implementation and, if need be, expansion of the housing rescue bill. Now that we own Fannie Mae and Freddie Mac and most of AIG, we've got to use our market power to covert high-interest, variable-rate loans to low, fixed-rate loans as soon as possible.

We could have put the brakes on this train wreck, but there was no political will from Main Street to rein in the good times. Let's get behind a plan to clean up this mess, learn from our mistakes and make sure that the good sense of Main Street forever controls Wall Street and Pennsylvania Avenue.

BILL McCARTY

Bristow

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The financial crisis boils down to this: A handful of Wall Street insiders -- mostly executives of the investment banks -- wanted to make even bigger commissions and bonuses. So they invented a pyramid scheme of subprime mortgages, credit default swaps and hedge funds. They were aided and abetted by the Republican administration and Congress, which fell over themselves to deregulate the securities, banking and insurance industries and then cut taxes on the insiders' bonuses. Now the house of cards has come crashing down, bringing the world's economy with it. Yet the insiders keep their bonuses and bow out with multimillion-dollar golden parachutes, the Republicans want to extend their tax cuts, and we common taxpayers are footing the bill.

Is it any wonder so many citizens are crying, "No more!"

GARY LETCHER

Ashton

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Let's do the math based on The Post's excellent Sept. 18 editorial ["Back to Bailouts"] and reporting ["Markets in Disarray as Lending Locks Up," front page].

Depending on how you add up the federal infusions and guarantees being spewed out to save Wall Street, you can easily tally the bailouts that taxpayers are on the hook to cover at as much as $700 billion. With a U.S. population of about 300 million, that's more than $2,000 for every man, woman and child, or close to $7,000 per household. It's a massive deflection of national wealth and a subtle but very direct tax on our standard of living to salvage past excesses.

Meanwhile, locally we are committed to spending more than $700 million for a baseball stadium in one egregious, bloated and naively negotiated deal ["Nationals Park Revenue Falls Short of the Mark," Metro, Sept. 19]. With a population of a little under 600,000 in the District, that's about $1,200 per capita.

I think I'd rather bail out Wall Street. Unfortunately, based on the serious regional budget contractions all around us, it's likely that D.C. taxpayers also will need to deal with propping up a teeter-tottering local budget next, once our government comes clean with what all the nearby counties and states have openly admitted months ago.

DAVID J. MALLOF

Washington