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Financial rescue plan helps stabilize markets

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Financial rescue plan helps stabilize markets
Detroit Lakes Minnesota 511 Washington Avenue 56501

Our global financial system is facing its biggest challenge since the Great Depression.

The sheer magnitude of the crisis and the huge stakes that are involved required America to set aside partisan politics and come together on a plan to restore order and help revive confidence in global financial markets.

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No one likes the idea of a bank bailout. But in reality, the crisis had already spilled over to Main Street. With the flow of credit seriously curtailed for homebuyers, student loans, housing and other business sectors, Congress had no other choice but to act.

The $700 billion rescue package approved by lawmakers in early October was absolutely essential to prevent a collapse in our financial system that would have inflicted devastating damage to our economy.

Policymakers continue to adjust to the rapidly changing landscape. The latest response by U.S. and global leaders was to inject cash into the world's banks and guarantee their debt. The Administration announced on Oct. 14 that it would purchase up to $250 billion in non-voting shares of banks to encourage them to begin lending again.

This marks an important turning point in the effort to restart the banking system. In the weeks and months ahead, this rescue plan should help stabilize financial markets, get bad mortgages off banks' balance sheets and pave the way for home values to stabilize and consumer confidence to start building back up again.

The rescue package builds off this summer's historic housing stimulus bill, which includes a first-time home buyer tax credit and much-needed FHA reform.

Some have criticized the tax credit on the basis of its payback provisions. But a $7,500 no-interest loan is not a bad deal.

The National Association of Home Builders has a Web site to help people understand how it works in English or Spanish at www.federalhousingtaxcredit.com.

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