8th congressional district Republican primary candidate Ken Arnold is nothing, if he is not a policy thinker.
During the GOP primary campaign two years ago, he came up with many detailed ideas.
But he didn’t win the primary election to face off against Democrat Melissa Bean.
No one but McHenry County Blog paid much attention to them, but that did not diminish their thoughtfulness.
Recently he has been thinking about the subprime mortgage problems and come up with the following ideas:
“The Comprehensive Mortgage Market Stability
and Tax Relief Act (CMMSTRA) of 2009”
BRIEF BACKGROUND AND HISTORY:In mid 2007, a financial and personal crisis has developed within our country. It is of our own making and, arguably, was based upon what I would call “three way greed”. Greed of borrowers in trying to get the largest and best house possible on what income they may have had – sometimes in the loose environment even lying about that. Greed by the mortgage companies for loosening their standards to make that “one more mortgage” with profit in mind. And greed on the part of the investors in these ultimate investment instruments (i.e. mortgage bonds) which in the artificially low interest rate environment of the last few years offered enticingly high rates of return. All are to no small measure to blame in this current mess. But this mess affects us all.
The current “sub prime mortgage crises” and general credit crunch affects us all in terms of the ability to get further credit expansions for the benefit of our economy. If uncertainties and risks increase, available funds decrease. And what funds are available will have much higher “risk premiums” attached to them which increases the overall cost of such funds. And with a higher cost of funds, certain job creating and economic growing activities will NOT be embarked upon. This hurts us all.
Additional, to our economy’s ultimately negative consequences to this based upon our credit markets is the more direct/negative impact upon home creation. Home creation rates not only employ major sectors of our economy to BUILD such homes – but also supplies much in Gross Domestic Product from all the necessary “spin off” products that come with establishing a household. These include the purchases of consumer hard goods such as clothes washers and furnishings to soft goods such as draperies and rugs. A materially slower rate of home formations leads to a materially depressed level of economic activity in these areas as well.
To read his solution, click here.