Editor's note: Jesse L. Jackson Jr., a Democrat, has represented the second district of Illinois since 1995. He is a national co-chairman of Barack Obama's campaign. Jackson voted against the bailout plan presented in the House on Monday but his spokesman said today he will support the Senate-passed bill. For a different view, read this commentary.
Rep. Jesse Jackson Jr. says the bailout plan is "Robin Hood in reverse."
(CNN) -- To borrow the title of a classic modern novel, "Things Fall Apart." In just decades, Americans have gone from Franklin Delano Roosevelt's New Deal to George W. Bush's Rash Deal.
During the last few days, my office has been flooded with phone calls from citizens throughout the country, expressing outrage and indignation.
To many, there's something awry, perhaps even unseemly, about this hasty plan. It requires the government -- which is running up huge deficits and record-breaking debt -- to borrow and spend the funds of ordinary Americans -- who are falling further behind and into poverty -- to rescue superrich bankers and barons -- whose obscene excess and avarice have helped to create the financial mess.
It's Robin Hood in reverse, taking from the needy to give to the greedy.
In one colorful description, the Bush administration's unprecedented $700 billion bailout plan was characterized as "cash for trash." It takes private industries' troubled assets off their books and dumps them into the public's lap, further privatizing profits and socializing losses. In doing so, the plan's proponents argued, cash and credit would once again flow, with benefits trickling down and the economy turning up.
But, from the outset, the proposal was seriously flawed. iReport.com: Do you support a bailout?
Fortunately, Democratic leaders, such as House Speaker Nancy Pelosi, House Financial Services Committee Chairman Barney Frank and Sen. Christopher Dodd, made substantive improvements to the original, flimsy three-page plan.
As a result of their hard work, the bailout package created a strong, independent board to oversee the plan; limited the pay and severance packages of executives in participating firms; and gave the Treasury the option to take equity in companies from which it buys securities, so that taxpayers can participate in potential profits.
Certainly, the around-the-clock negotiations resulted in a better, fairer and more transparent plan.
However, the revised bailout bill provided only a Band-Aid to the failing financial system. What's required is a rescue -- primarily of homeowners, who are the victims of this crisis.
Fundamentally, this financial crisis has been caused by falling house prices and defaulting homeowners. Yet the bill does nothing to rescue millions of families facing foreclosure. The financial bailout package should not only purchase the mortgage-backed securities of Wall Street, but also secure the backs of those carrying mortgages on Main Street.
A more effective, appropriate and responsible bailout bill should allow homeowners at risk of foreclosure to restructure their loans and stay in their homes. That's a bottom-up approach that protects homeowners, stabilizes financial markets and benefits taxpayers. It would treat the root cause, not just the symptoms of the crisis.
In fact, 770,000 families entered foreclosure in the past year, and 6 million people are expected to default on their mortgages this year and next. A recent report by the Joint Economic Committee of Congress anticipates that more than $100 billion in housing wealth will be lost through 2009 foreclosures and their effects on neighboring properties.
First and foremost, this financial crisis is about people who are struggling in communities across the country. It's about people who are hardest hit by this financial downturn and sputtering economy. It's about people who look to and depend on their government in a time of crisis.
It's about people who are the faces of foreclosure, such as Mildred Howell of Illinois, a 69-year-old widow and mother of three. Mildred and her husband worked all of their lives and nearly paid off the modest home they purchased in 1969. But then, in 2003, tragedy struck: Her husband, a retired police officer, was robbed and beaten to death.
Needing money to meet expenses, she sought a reverse mortgage. Instead, a mortgage company steered her into refinancing her home with an adjustable-rate loan that quickly ballooned and left her broke and nearly homeless. Mildred was able to save her home only after going back to work and finding a "moral Realtor" who is helping to refinance her home at a fixed, affordable rate.
Indeed, the financial institutions need help. But so does Mildred Howell and the millions of other Mildred Howells throughout the country -- the real victims of this financial crisis. This bailout must not leave them in financial straits. Therefore, the rescue plan should provide direct safeguards and assistance to homeowners, by doing the following:
• Imposing a national, short-term freeze or moratorium on all foreclosures of owner-occupied primary residences
• Granting bankruptcy judges authority to modify mortgages on primary residences
• Establishing a program and procedures allowing restructuring of sub-prime loans under affordable, fixed-rate terms
These fair and modest steps will protect middle-class homeowners and stabilize the housing industry. The housing market must be secured if we expect to resolve the crisis and strengthen the economy. Mildred Howell and millions of others are counting on the "People's House" so they can stay in theirs.
The opinions expressed in this commentary are solely those of the writer.