As lawmakers contemplate a massive bailout plan for poor credit mortgage holders and banks, many experts are wondering how wise this move will be. Although everyone agrees that something needs to be done to slow the rate of defaults on poor credit mortgages, questions remain as to how this should be done. The two biggest lenders in the US are attempting to shore up the housing market and will most likely offer to refinance many poor credit loans, but experts wonder if this will be enough.”Even under a severe stress scenario, the contingent fiscal risks of broker-dealers will not threaten the AAA rating on the U.S. government,” said John B. Chambers, chairman of S&P’s sovereign ratings committee.”Leveraged speculators need to know that it is not ‘heads they win, tails the taxpayers lose,’” said Peter Schiff, president of Euro Pacific Capital. “By bailing out lenders who extend excessive credit, the Fed simply invites more of that behavior. By interfering with this process, the Fed simply guarantees more losses and even bigger bailouts in the future,” he said. “Wall Street executives amassed fortunes by making extremely risky bets. Now that those bets have soured, why is it taxpayers that have to swallow the losses?”
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