Bonus for Homes
“Bonus for Homes” is a new initiative to address the widening gap between the fortunes of many Wall Street professionals and the poor of Main Street facing foreclosure.The initiative is motivated by two principles: First, that the solution to the "bonus problem" should be private-sector driven and anchored by a framework that fosters competitiveness, innovation and solid risk-management; and second, that the funds raised should be targeted to those who need it the most. Below is a link from a New Yorker article from November last year. It describes one case of a tragic human story one would hope to prevent with this initiative!
http://www.newyorker.com/reporting/2008/11/24/081124fa_fact_boyer?currentPage=1To this end, I am hoping to partner with well-established charities to set up a fund, where Wall Street professionals can make a tax-exempt contribution from their 2009 bonus. The funds raised will be used to provide debt relief to low-income households at high risk of foreclosure.
The potential benefits of this initiative are tremendous:
First, effective targeting. The identification of eligible beneficiaries is informed by recent economic literature, which suggests that those most in need are low-income households with little or negative equity in their home and a serious cashflow problem--e.g. resulting from the loss of a job or the sudden rise in their monthly mortgage payments.
To ensure effective targeting, I am seeking to partner with one or more established charities with a solid track record of fiscal responsibility and experience with providing financial relief to truly needy households.Second, a true contribution to the economic recovery: By targeting low-income, cash-constrained households, the relief would free up cash that has a high probability of being spent on other goods and services in the economy, helping the recovery process.
Third, a better use of your tax money: Up till now, most government measures to support the housing sector have fallen short of providing relief to those most in need. Recent data from the Congressional Budget Office show that at least $150 billion in 2009 alone have gone to support the purchases of homes or the refinancing of existing mortgages by people who could afford to do so. (The $150 billion includes cash infusions and subsidies to Fannie and Freddie and the cost of the first-time homebuyer tax credit). "Bonus for Homes" offers donors a chance to free up some taxable income for true financial help to those most in need.
We would love to get your help and you don’t have to be a banker with a big bonus to contribute to this initiative. Your biggest help could come by spreading the word by forwarding this page!And, of course, if you are a professional in the financial sector, we would very much welcome your pledge to contribute. I myself belong to this latter group and, needless to say, I am the first one in! One more thing, for those who might question the premise of a "bonus problem": It doesn’t take a scientific study to see that the impressive market turnaround we’ve seen this year (so far!) is in part the result of astounding government policies specifically intended to restore faith in the financial sector and incentivize risk-taking. Not to mention the ongoing support to some financial institutions in the form of implicit and explicit backstops and a commitment to zero short-term rates, which facilitates bank profits from a steep yield curve. This is not to say that Wall Street should not get rewarded for doing its job successfully. If anything, bankers are playing their own part in kick-starting economic growth, though the calculated resumption of risk-taking, which has been helping finance “real” companies employing “real” people. But still… let’s have a dose of modesty this year and reserve our self-congratulatory pat-on-the-back for the time when we fully emancipate ourselves from the government’s (still pretty visible) hand!