We need amnesty for the middle class. We are going through the closest thing we have to the Great Depression and it has torched middle class credit. Forget the millions who have lost their homes or the people who have declared bankruptcy. They will be effectively shut out of the credit market for years. But you now have millions of people whose FICO scores have fallen below the magic number of 620 which is the minimum for a government loan--or FHA. These people have now been shut of the credit market as well.
What does this mean? It means that the recovery will not come. People have to be able to secure credit to buy homes again and if they can't then supply will outstrip demand and the values will continue to fall. Credit is the lifeblood of the economy. Because someone is late on a credit card payment or cannot pay a medical bill does not mean they should be denied credit for buying a home. If we go with the assumption that these are extraordinary times then there must be an extraordinary remedy--middle class amnesty.
We did it for the banks and the car companies and the insurance companies. The rational there was yes they made bonehead decisions but these are extraordinary times and for the common good they must be bailed out. So we did. We basically forgave their very bad creditworthy decisions and gave them billions to get their house in order. Isn't that what we should do now for the middle class? Forgive their bad decisions under the umbrella of extraordinary times?
Look at in a selfish way. We must have amnesty for the common good. We need to get the economic engine going again and you cannot have that if you are locking people out because they got behind. If people have to make a decision between paying a medical bill or their mortgage then they will pay their mortgage. Of course incomes are down. Of course people have been laid off. We are in a near Depression and there has been carnage across the board.
So we must have an amnesty for the middle class. This will get people back in the credit market. We cannot give the banks and corporations a bye and then stick it to the middle class. They have been victims too. What is good for the goose...is good for the gander as well.