According to an article in the Dallas Morning News, the Obama administration has unveiled a new program to purchase banks' "bad assets" which will include toxic mortgages. The "bad assets" shopping spree will require $75 billion - $100 billion which will be taken from the existing $700 billion bailout program as well as private investors and the Federal Deposit Insurance Corp.
The article said:
Obama called it "one more critical element" in a multi-pronged effort to revive the economy and said the depressed housing market is beginning to show glimmers of hope.
Geithner said the new program will initially seek to harness government and private resources to purchase a half-trillion dollars of bad assets off the balance sheets of banks and said he expects that purchases eventually could grow to $1 trillion.
Supposedly this "bad assets" shopping spree will relieve banks of bad debts which will free them to loan more money to the American consumer. But is that what we really need? And will it really work? Right now, Americans are defaulting on credit card loans and mortgages at a level not seen since the Great Depression. The last time I checked we were supposedly trying to stop the foreclosure crisis and help homeowners modify toxic mortgages before they lose their homes to foreclosure. What happened to that plan? So far we have thrown good money after bad to the banks and mortgage companies and have watched foreclosures and personal bankruptcies continue to rise. Americans are still losing their jobs, losing their homes to foreclosure and turning to bankruptcy to gain much needed relief. At this point many Americans simply don't have room for more debt, they are literally MAX OUT. The Obama Administration and legislators must redirect our remaining resources to individual Americans who are literally drowning in bad debt.