Homeowners Asked To Bail Out Banks With Their 401Ks
It’s hard to believe anyone would propose yet another bank bailout, but Senator Johnny Isakson (R-Ga) and Representative Tom Graves (R-Ga) have just such a plan. They propose that Americans be allowed to withdraw from their 401K accounts without penalty to make mortgage payments to banks.Now on it’s face it seems entirely logical to let homeowners use retirement funds to make a house payment to preserve equity in their home.But hold on Americans for the most part have no equity in their homes
As we all know, after the banks got their first bailout, they ramped up foreclosures and flooded the market with discounted foreclosed properties, which had the immediate effect of depressing home prices and values. Instantly, millions of Americans found themselves underwater – owing more than their homes were worth.
Faced with paying thousands of dollars to banks, with little hope of their homes ever being worth what was owed to the banks, many homeowners made the decision to just stop paying, then to walk away when the underwater property was foreclosed. The reality of homeowners simply not paying has made bankers very mad and very anxious. After all, if millions stopped paying the bankers, then their friends in Congress might have to actually do something about the underwater housing crisis confronting over 30% of American homeowners.
Count on the bankers to swing into action to protect themselves. To keep homeowners paying, the bankers, through their Congressional allies Sen. Isakson and Rep. Graves, have come up with a novel plan: homeowners should deplete their 401Ks to keep the bankers paid. Yes, American homeowners are now told to keep paying that underwater mortgage despite that fact they will not have a penny to retire on after draining their 401Ks. Throw away your retirement to bail out a banker who screwed you.
Give bankers credit for creative thinking on devising yet another way to rob you.