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As a 66 year old senior citizen I have seen many a financial downturn in America, but this most recent one is the most troubling. Regardless of how it started, the emphasis should be on how to fix it. I would like to share my thoughts on a few ways to do just that.

FIRST, the U.S. treasury should create a central credit clearing house that would approve all future personal and business loan applications submitted to them from banks and lending institutions. These would be loans for automobiles, homes, furniture, education, etc. for folks who need to borrow in order to buy these items. There would also be applications for business loans to increase inventories, hire new employees, expand business, etc.

When those applications are approved they would be returned to the banks and lending companies with a loan guarantee document that would backup the loans against defaults. This would promote confidence in the lending of money again because there would be no worry that the loan(s) would not be repaid. Business would again flourish; people would once again be buying cars, clothing, appliances. etc. The companies that sell these goods would make money again, hire more people who would be making money to spend buying other goods, paying their bills, paying taxes on their incomes and sales taxes too. Everyone would benefit from this process. Additionally, more government jobs would open up in the new government credit clearing house. It’s a win-win situation.

The SECOND suggestion would have to do with Real Estate Investment Trusts and other securities and funds that contain "packaged" mortgages. This practice should and must be stopped until these mortgages are first cleared through the aforementioned U.S. Credit Clearing House. If investment firms had this process in place before everything recently hit the fan with "subprime" mortgages, we would not be in the situation we are now in.

When I purchased my first house back in 1967 the bank from which I received and approved my first mortgage also serviced my mortgage along with all the other mortgages they sold. There were no REITs and no selling of mortgages as securities or for that matter, no "subprime" mortgages. If you didn’t qualify for a mortgage, you didn’t get one, PERIOD. Old-fashioned common sense business practices. Perhaps our current business transactions should take a lesson from their counterparts of a different generation. I hope that these suggestions are given serious consideration for I truly believe that if implemented correctly they will work.

From: http://www.economyincrisis.org