Open Letter to the North Dakota Federal Delegation
Dear Senators Dorgan, Conrad, and Congressman Earl Pomeroy:
The current Wall Street credit crisis revolves around the fact that banks and brokerages over-extended loans to people that were probably not credit-worthy for those loans. While the individuals who took those loans out are not blameless, the banks and lenders that gave out the loans had the power to make better decisions. Now, the market is holding those less than perfect decisions against those banks. Today, the interest rate that banks are charging each other to borrow money (referred to as the “LIBOR”) is in the high 6% range, it’s simply too expensive for banks to borrow money from other banks.
This situation was created by poor business decisions. The fact the interest rate that banks are charging each other is so high shows they do not trust each other.
If the banks do not trust each other, how can taxpayers and their representatives in Congress trust them any more?
This crisis will not be solved by giving Wall Street a wheelbarrow full of freshly printed cash. This problem requires a “trickle-up” plan to make it easier for consumers to pay their own bills.
The following are a few ways the Federal Government can inject cash into the credit market without spending taxpayer’s money:
• Tax-Deductible Debt Payoff – Allow the average American to write off their Federal Taxable Income an amount equal to the amount of debt paid during the 2008 and 2009 tax years. (If a person pays off $20,000 worth of debt – principle and interest combined - they can write that $20,000 off their taxable income.)
• Restrain Credit Card Interest Rates – Americans are having difficulties paying their credit card bills and mortgages, by restraining credit card interest rates people can start paying down more of their balances, which will allow these banks to re-balance their own finances. Credit card holders can either reduce their credit card balances faster, or better afford their mortgages.
• Mortgage Voucher Program – the Federal Government should cover the mortgage interest payments of any homeowner who wishes to continue making minimum payments to stay in their home. Once the balance of the mortgage is more in line with the real value of the home, the program can cease and people can stay in their homes.
• Corporate Tax Deferment – Allow corporations a two-year deferment of federal corporate income tax payments. The corporate income tax rate in America is 35%, to ensure that these corporations are around to pay any tax, Congress should allow them to defer their tax payments for two years while they get their financial houses in order.
Congress and Wall Street are making this situation more complicated than it really is.
American families deal with debt every month on their own kitchen tables when the bills come in the mail. Allowing those families to better afford those bills will bring a quicker flow of cash to the struggling credit market without putting the taxpayers on the hook.
Sincerely,
Dustin Gawrylow, Private Citizen
