For a while now, many can spectulate the trouble started at the tail end of 2006 with the mortgage industry busy, the American economy has been struggling, facing uncertain times.  Many understand the historic significance of last week but the implications of a federal bailout has yet to hit home.  With the annoucement that the Federal Reserve will aid the ailing AIG with an $85 billion rescue package, the details seem murkey as more politicians throw in his or her two cents of how this bailout will work and impact the economy.  While the bailout does not favor AIG, the company must hand over 80 percent control of the organization's future business dealings, this new bailout and the status of future bailouts remains in the balance and hands of the federal government who stepped into save the mortgage giants Fannie Mae and Freddie Mac not too long ago with a $100 billion package.  Where this differs and many fail to see a need to save AIG is that Fannie and Freddie were already government controlled and sponsored by federal dollars.  Why should the federal government step in and save a stockholder owned company?  What I am trying to say is that this bailout of finance giants has been a popular trend, starting with a $30 billion loan to Bear Stearns in February.  It is a trend we will see more of and possibly a part of the Federal Reserve's strategy to save the American economy.  I believe many who are struggling to make ends meet, living pay check to pay check, the working class and even the upper class, when push comes to shove and with a cold winter on the way, wish that the Federal Reserve would give the American people a loan.  That $300 incentive check just did not cut it.

While AIG must pay the Federal government back or risk losing control of its interests, many are concerned with the level of government involvement and bascially, the bottom line, who really will be paying for the bailouts?  Is Washington really to blame for this mess?  What about corporate accountability and the management of these organizations?  Something is rotten in Denmark as Shakespeare wrote in Hamlet.  Really it does not add up.  It is cause to worry of how this can be avoided in the future but also how this will impact the American people over the years to come. Many will argue that this has been a long time coming that part of the issue has been a faillure to tighten lending practices and that the subprime market has lead to the downfall of the whole market.  Truly companies like Countrywide should have known better instead of living high on the hog.  We could have avoided a lot of trouble today with bad loans.

So should the federal government step in and save companies riddled by bad behavior in the market place?  This whole crisis begins and ends with the practice of predatory lending and we've known it since before the mortgage buble burst.  As said above, not only Countrywide but other banks allowed their lending practices to be too flexible allowing many under qualified borrowers to purchase items like homes and cars.  Many brokers pushed such products on people who otherwise should not have been buying in the first place.  Many did not look at the full picture and mainly the issue of repayment.  Now the market is suffering due to underperforming loans or bad loans.  Still the bank is at fault, they should have never allowed such practices to continue but they were leveraging on the risk involved as long as the portfolio was performing well, the bank was making money on subprime products.  Now the current situation prevents this demographic of people with blemished credit from establishing any credit and only the prime customers (A & B paper) will prevail.  Many will have to learn to live without or forget about keeping up with the Jones because there will just not be any loans out there for these customers.  It is unfortnate because this takes aways from sales people's commission salaries and many people of these professional will be out of work.  Truly this is why so many people have never believed in the concept of credit in the first place.  It creates a vicious cycle. 

How will these bailouts impact the American taxpayer?  As if we are not already feeling the crunch at the gas pump, the grocery store and now for those us in colder climates, the estimated heating bill? How can this be fair that politicians get decide how our tax dollars are spent?  Many people are not only out of work, but losing their homes or very close to ruin.  What about helping the American taxpayer by allowing cash flow into their pockets?  Make it a law that the living wage needs to compensate for the higher cost living? Interspurse the funds into American economy that way because then the country's lifeblood will survive and create regrowth.  Instead by bailing out these organizations, it is only leading to tougher times and what if those organizations fail again?

It seems that the government only has the interests of corporate America as a concern while so many are hurting on every front.  No longer are there opportunities but only just getting by.  While many are already foreclosed upon, others seek help from the bank's workout department with repayment plans and loan modications which in the long run allows for stability but this remains in the hands of the borrower.  Many do not know that there is help or are too ashamed to ask.  Bush's new housing bill put into effect in August only puts the borrower at the mercy of the lender and doesn't offer the hope so many people need right now. 

At this point how do we know other great institutions will not follow suit at the burden of the taxpayer?  There is already talk that Washington Mutual or WaMu may be trouble and then who will be left standing?  Bank of America, Citi?  The system needs to be fixed with a greater focus on how these companies are managed and there needs to be some fat cut out of the chain of command.  The loans are coming to an end but how do we pick up the pieces for those who may face foreclosure soon?  Yes workout programs with the lender will be a proactive measure to stop foreclosure but this must be a team effort.  The borrower must want to work with the bank and not hide from their mistakes.  Any cleanup involved begins and ends with admitting there is a problem here and then and only then can recovery start. 

What does all this mean right now for the American taxpayer?  This is mess that did not happen over night and nor will the remedy happen in an instant.  The numbers are not encouraging as it is estimated that over 6.5 million foreclosures will take place over the next three to four years.  This means a lot bank owned property and also that home values will be down significantly or $356 billion.  I think that many do not see the far reaching ramifications but pretty soon, we will all feel them.