Solution to Subprime Woes

Well, it looks like the Fed did another interest rate cut in order to help improve the credit markets. They have to deal with all of these credit problem, especially in the sub prime market. I think I figured out the perfect solution to stop the hemorrhaging of money and help people at the same time. It might mean the government increases their debt, but the government already has a lot of debt anyways. What’s a few trillion more?

The government needs to take all of these subprime mortgages over. Freeze the interest forever and then make a simple declaration. If anyone falls behind on their payments, then ownership reverts to HUD. They could then rent out he house to low income people, heck even rent out to the current occupants. Max rent of 30% of income. In effect, the massive inventory of houses won’t enter the market at firesale prices which should shore up the housing market in general and low income people get cheaper housing. Win-win. The Republicans get to protect the banks. The Democrats get to provide better housing for everyone.