Salon has a followup article on their earlier Declaration of Independence article (see http://sol-biotech.com/wordpress/2011/10/31/a-new-declaration-of-independence/ for my take on their original post):
Your Declarations: Readers respond to our manifesto
From campaign finance reform to narrowing our focus, you weigh in on Salon’s grand plan to remake the nation
http://www.salon.com/2011/11/01/your_declarations_readers_respond_to_our_manifesto/singleton/
I found many of the comments interesting, but wanted to point out something I think would really hobble our economy:
What is needed is an end to the resale of any loan, in whole or in part, in any form, at any time. The originating bank or lending firm must keep the loan, forever, and 100% of that loan, until it’s paid off. If it can’t do that, it shouldn’t be in the lending business in the first place. We need to make it a law that all loans remain with the original lender. Forever.
I think it is a huge mistake to lump the resale of debt with the events that cratered our economy. The reselling mortgages was not even a proximal cause of the problems (Fannie and Freddie have existed for a half of a century), it was the corruption that was facilitated by the lack of oversight. The packaging of mortgages (and the manifold other debt that gets securitized) is a hugely valuable way of not just pumping money into the economy, but providing stable, secure returns on investments. Insisting that banks hold their mortgages not only dramatically reduces the opportunities for mortgages (which, btw, would even further crater the price of homes!), but robs not just big corporations from safe havens for their excess cash, but little old ladies living on fixed incomes. Personally I am a risk seeker, so am unlikely to be enamored of the traditionally thin returns of debt (as well as its sensitivity to inflation), but I can envision a different time when I am already in retirement and can no longer stomach the dips of the stock market.
Similarly, the problem with student loans is not the loans themselves, it is the reward mechanism (exactly like the corrupt mortgage brokers) that encourages loan originators to ignore the ability to pay (why give $100K worth of loans to an English major, for example).
Debt securitization just needs to have effective oversight in place (and hard jail time for the offenders), eliminating it would not just stall our economy, but put a hard cap on its ability to grow going forward.
The headline has a typo . . . “independence” has no “a”