My Bailout Plan.

Hey everyone!

TEN BANK FAILURES!!!! WOOOHOOO!!! Or rather, WaMu! That's right, the bank who's nickname sounds like a hybrid goat created somewhere in the caves of Pakistan, has now been seized by the feds!

JPMorgan, the hahawegetnoriskthanksunclesam-purchaser of Bear Stearns, has bought up several thousand WaMu branches and billions in their assets.

(50 bucks says they buy Wyoming next)

Anyway, with the economy tanking, Congress has been scrambling to throw somewhere in the range of 700 Billion to buy out the bad CDOs....

...that is after it already:

1) Given JPMorgan a no-risk deal to buy Bear Stearns
2) Sent out $150 Billion in stimulus checks
3) Rescued Fannie Mae and Freddie Mac
4) Rescued AIG

Here's my question...does anybody actually know the percentage of foreclosures? I mean, really, do you?

Here lets do a multiple choice:

A) 10%
B) 20%
C) 30%
D) 40%


The answer is....NONE of the above. The answer is 2%-3%. The problem isn't the number of foreclosures!!! Most of the CDO's are paying near the correct amount of interest. The problem is that no one wants to buy them and so, because they were bought with borrowed money, the value of them needs to be written down, and the banks need more cash to remain what is called "A well-capitalized institution". If the banks had bought these with cash, they could hold onto these CDO's to maturity and just get a constant flow of interest and the principle repayments

So, we need to give $700 Billion dollars to these banks because they made one bad business decision?

NO WAY. NO HOW. NO BAILOUT.

So, how do we restore confidence to the banking system?

Increase FDIC insurance to $1 million/account. Hell, make it $100 million per account.

Insure every dollar in cash that every hard-working American has. This way, even if your bank goes under, you know you'll get your money.

This way people don't keep on causing runs on banks. The banks remain well capitalized institutions and the fear leaves the market. Now, with their deposits run-proofed, the banks have enough time for the CDOs to come to maturity and yield profits.

This will cost MUCH less than 700 Billion. You know, unless like half the united states had the entirety of its savings in WaMu.

(it doesn't)

-Mansij Hans, E.I.T.
Member, Intigril Capital Management.

Disclosure: The other members of Intigril Capital Management do not necessarily share my views on the above proposed bailout discussion.