Criticisms on Modification of Loans and Other Obama Economic Glitch Fixes

The Obama administration has received a lot of bashing because of its alleged haphazard establishment of programs to lessen, if not totally eradicate, the shock of the recession on the U.S. economy. Some of the controversial recession solutions that the government has proposed and passed are the Credit Card Bill, The Health Care Bill, and the Obama Modification of Loans Plan.

Let us take a closer look at why these programs have been under fire.

Credit Card Bill

The Credit Card bill has heralded a new era of credit card and banking practices in the U.S. For consumers it meant so much financial relief as it would protect American cardholders from abuses in the banking industry by putting a cap on over limit fees, taking out double cycle bills fees on online bill payments, and implementing stricter measures in approving credit card applications for minors. On the other hand, for major credit card issuers and banks, it meant overhauling traditional practices that could lead to dire consequences on the industry’s revenues. According to a cumulative study and predictions of banks, this could lead to higher credit card charges, the industry’s way of getting back the lost revenues. Another adverse effect of the bill is that it would limit credit accessibility. Now, credit card issuers will be stricter in assessing the risk of every application they process before approval. In the end, those who need credit might not be able to be approved right away because of the results of the Credit Card bill.

Health Care Plan

Another part of Obama’s recession fix is the Healthcare plan. Under the Obama healthcare 2009, the government will cover the health insurance of all Americans. Although this sounds very beneficial to citizens, the healthcare is now under fire. Many politicians and citizens are vocal about their disapproval of the plan. According to them, the program would only serve the advantages of the minority and will leave the majority with more taxes to be chopped off from their meager income.

The healthcare debate is still an ongoing issue that will continue to create fire unless the government is able to write a bill that creates a balance for both those who are a great healthcare risk and those who do not need much of the insurance.

Loan Modification

The Obama administration has included loan modification as part of its economic glitch fix. This program has been instituted in the hopes of fixing the rising number of troubled loans in the US. The government has pledged $75 billion to get this program to work. Under this program, lending institutions should follow the conditions stated below in modifying loans:

?    Reduce the monthly payment by 31%
?    Reduce the interest rate for as low as 2%
?    Extend the term of the loan to up to 40 years

This may seem like the perfect situation for borrowers, but some lenders and financial analysts think otherwise. They are saying that it is too ambitious and that the trends in US housing would make it impossible for this plan to work. In the last survey, 53% of those modified loans went bad again after only a period of 6 months. Moreover, it would only make lenders more and more adamant against the modification of loans just like the prediction of what credit card bill might bring to the table.

These are just some of the criticisms to the programs established by the Obama administration to prevent the recession from decimating what is left of the U.S. economy. Although these programs have been instituted in the hopes of saving Americans from sinking deeper into the spells of the financial crisis, no economic glitch fix would work unless there is proper planning and implementation. There is a need for a well-oiled system of authoring the bill to make sure that all factors and parties are taken into account to serve the good of the majority. At the same time, these programs should be implemented in accordance to the conditions set during the writing of the bill. At the end of the day, these economic glitch fixes would only deserve being called such if they serve the common good and deliver the results they promise.