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What does Obama’s State of the Union Mean for Me and for My Financial Situation?

Obama has expressed the importance of our country coming together and making the effort to better the current financial and economic situation.  He called in state governors and city mayors, vowing to hold them accountable for every dollar they receive from the federal government.  He used his State of the Union address this past Tuesday to reiterate the importance of every individual moving forward; more importantly, he explained how his plan will work to help everyday Americans.

The message the White House has been sending this past month has been that today is the day that change has come.  Tuesday’s speech was no different.  We need to change our ways as people when it comes to spending, lending, and borrowing. More importantly, President Obama told congress that today was the day they have to stop putting off reform.  In order to better understand the situation, we have to realize how we got to this point.  Congress allowed banks to exercise past lending practices and to push bad loans Reform was put off.   Discussions about Healthcare and Educational reform was put off for the next year and for the next administration

As the leader of this next administration, Obama has given us access to a website, recovery.gov, as a place to go and follow exactly where every tax dollar is being spent.

The importance of credit in our economy has never been so visible.  Obama said if credit isn’t flowing, then the process of recovery we must go through twill not begin.  If people cannot get loans then they cannot buy homes or cars. Aspiring students will not be able to apply for student loans.  If credit is not freed, stores cannot stock their shelves and sales cannot be made.  If lending is not opened up, then businesses cannot make payroll and people get laid off.  So banks stop lending to individuals and each other and eventually credit dries up.

We need to put an end to this destructive cycle and restore confidence and lending.  President Obama has laid out a three part plan to do this.  The first part of the plan comes in the form of the new lending fund, the largest effort ever made to increase lending to the following people: auto loans for consumers, business loans for entrepreneurs, and education loans for students.  The second part of Obama’s plan is a housing program to help responsible home owners lower their monthly payments and refinance their mortgage.  The third part of the plan aims to restore money and confidence to the banking system.

From the top, this plan looks like an effort on all fronts to encourage lending, the true question is just how much will this cost us over time?

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Category: Government Bailout, Lending

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