RIT Prof: Bail Out Mortgages First

Leah George

R NEWS
(July 15, 2008)

 

The head of the Center for Consumer Financial Services at Rochester Institute of Technology says the government needs to shift its focus if it wants to help the U.S. economy.

Robert Manning, PhD wrote the award winning book 'Credit Card Nation.' He also accurately predicted the collapse of the housing bubble more than two years ago.

Dr. Manning says the thing that makes this recession so much different is that, “it's a consumer-led recession.”

Instead of bailing out the bad actors on Wall Street, Manning says the government needs to shift its focus to helping average Americans who've made bad financial decisions or decisions they were advised were good at the time.

"That's the problem with the lack of American leadership, is the average American doesn't know what they should be doing. We need to lock in on the lowest cost fixed rates that we have available to us. The next issue of course is really looking at, are we living beyond our means? Are we spending more than we can afford? And really starting to ride our ship. If we do not get some form of responsible debt relief for the American consumer this recession will last longer and it's going to be deeper," said Manning.

Manning says the subprime lending crisis has exposed America's economic vulnerabilities.

He predicts it will take about a year and a half for the housing market to bottom out. When it does, he believes the American economy will no longer be the single most important economy in the world.

"The average American really needs to understand that things will change profoundly with this recession and that those people who haven't been managing their resources and planning for the future are really going to have to take a step back and say, how are we going to achieve our financial goals? The magic of a housing bubble now is over and the reality is, we're gonna have to make real sacrifices if we're planning for the future. And that is a mindset shift that most Americans right now are unprepared for," Manning said.

Because of the upcoming presidential and congressional elections Manning says policies that could substantially impact the economy won't be implemented for at least a year.

In the meantime, he's touring the country promoting his 'National Debt Relief Program' which he says helps consumers and creditors better understand how much debt a person can really pay down and avoid bankruptcy.