Market Rates For The Middle Class
With a couple of simple fixes from Congress, billions of dollars could be put into the economy by allowing middle class families to refinance their mortgages and by keeping student loans at market rates.
Maybe they should talk to Super PAC mega-contributor Sheldon Adelson instead of Congress.
Adelson is the guy who bankrolled Newt Gingrich's Super PAC with over fifteen million dollars and is penciled in for more millions of dollars of right wing Super PAC political contributions.
They should talk to Adelson because he got a great deal from a bank yesterday: his Las Vegas Sands Corporation, a business with a junk-rating, got a sweetheart deal with investment-grade terms from the banks.
To be clear: a business with a risky investment rating got a deal that was better than the credit rating would suggest the business should get and that saved him tens of millions of dollars in interest payments.
This is the problem with our politics today.
Give a market rate refinance to a homeowner who missed a payment because she lost her job and her husband got sick with a pile of medical bills so the family doesn't default and the Tea Party goes nuts about socialism.
But a casino mogul? Hey, that's America. That's Capitalism!
I am not saying the banks shouldn't loan to the Las Vegas Sands Corporation. I am just saying that students and homeowners should get a good deal from our banks, too.
If they could get a fair shake on interest rates it would put money back in the economy. Billions of dollars. With easy fixes and no special breaks. Just market rates.
Now this might hurt JPMorganChase's ability to make, and lose, multi-billion dollar speculative bets. But it would be great for the economy.
The only thing standing in the way: the very Republican Party that the owner of the junk-rated company, Sheldon Adelson, contributes tens of millions of dollars to.
Congress has legislation to fix both student rates and access to refinancing. But banks, with their taxpayer-insured savings accounts, bailout money and virtually no cost access to cash from the Fed are holding the line.
They don't want to lose lucrative, above market rate loans.
At a time when interest rates are at historic lows, in a bad economy where college graduates have a tough time getting their careers started, student loan rates are about to double thanks to Republicans in Congress.
It is one of those things that is easy to fix – if you want to fix it.
In July, 7 million students will see their rates double from 3.4 to 6.8 percent. While interest rates are at an all time low.
For homeowners, Congress could easily eliminate costly barriers and bank imposed impediments to refinance. Current interest rates could save homeowners, on average, $3,000 a year.
That's not a special rate – that is paying the current market rate. That is not lowering the principal on underwater mortgages. That is not giving access to investment-grade terms to junk-rated barrowers.
There is nothing free here.
Just paying the fair market price.
That money would go far in stimulating the economy, reducing foreclosures and resuscitating the housing market comeback.
Republicans prefer Mitt Romney's prescription: "Don't try to stop the foreclosure process. Let it run its course and hit the bottom."
It is easy for a guy with four houses to say that. And I am sure he got a great deal on the rate for his four-car elevator at his beachfront house.
The choice is simple: do you stand with Democrats for a thriving middle class and upward mobility in America? Or do you stand with the Republican vision of an Old European style Oligarchy where a few prominent families pass their influence and wealth from one generation to the next?
Or the very system our forefathers came to America to escape.
About Bill Buck
Bill Buck is Democratic strategist, President of the Buck Communications Group, a media relations and new media strategies consulting business based in Washington, DC, and Managing Director of the online ad firm Influence DSP. He has over twenty years of international and national communications experience. The views and opinions expressed in this post are those of the author and do not necessarily reflect the official policy or position of CBS Local.
