Bailouts don't work.
What would work is to better regulate the credit industry. We should disband the Fed Reserve but put a few new rules into place.
First, credit cards should be banned from marketing at college campuses. I know it sounds odd to hear me support a ban of any kind, but this one actually makes sense. Over 30 years ago, credit card companies weren't allowed to market as aggressively to young adults as they do now. My parents can remember a time in the late 70s and early 80s when getting a credit line of any kind was difficult. This was a good thing though, because banks made sounder, more fiscally conservative decisions partially because of certain regulations in place. Getting a credit line was a sign of responsibility and of having the financial security to pay your bills on time.
Nowadays, credit companies intentionally seek out people with bad credit because of the higher interest rates they can charge and with the hope that they pay late, so that they can jack up rates even more. This little scam worked for a long time until the number of bankruptcies and completely negligent people rose to a level that the companies started amassing huge debts of their own.
Part of the repercussions of this scam and reckless greed was that parents of college students ended up bailing out the debts of their students on a massive scale. Thousands upon thousands of families across America are hurting more financially because of irresponsible actions on the part of their student children when they sign up for credit cards at kiosks that colleges allow in student gathering areas. At first, this was a manageable problem, but with so many older adults already living beyond their means, the debts of their children can make the difference between staying afloat and going bankrupt.
In short, this has to stop. We've cultivated a lifestyle of debt in this country that is mirrored in an exaggerated way by the actions of our politicians. Banning credit marketing to students on college campuses would be a good start to limiting the effects of irresponsible spending and lending.
Second, repeal the CRA. The Community Reinvestment Act was well-intentioned but horribly implemented.
Third, repeal the Gramm-Leach-Billey Act and reinstate the Glass-Steagal Act. Mortgage derivatives and other risky behavior should become things of the past.
Fourth, regulate the fuck out of Fannie Mae and Freddie Mac. Barney Frank's bullshit should be a thing of the past as well.
Fifth, end the bailouts.
Other than that, we must let the market clear itself.
