Alex Wong / Getty Images

Federal Reserve Chairman Ben Bernanke speaks during a conference on housing and mortgage markets Dec. 4 in Washington, DC. Bernanke spoke on the latest development of the credit-market crisis.

Put the cash
back in your pockets

Editor, The Times:

Here is a quick solution for the housing and economic crisis:
In the next 30 days, require all banks that are receiving federal aid to adjust all mortgages on primary residences to 3.5 percent, 30-year fixed rates.

Issues solved: Homeowners would see an instant relief on their monthly payments, freeing up cash. This lack of delay would bypass mortgage brokers, red tape and other time-consuming issues that would delay relief.

The current Fed plan of lowering key rates ["Fed's big rate cut just for starters," Times, page one, Dec. 17] and expecting banks to pass this along will not solve the problem. Housing prices have deflated and jobs have been lost, so many people will not be able to refinance if given the opportunity.

This plan would instill confidence in the public for the $350 billion that has already been partially given to the banking system, with little oversight and with no noticeable results.

People who can't survive after this drastic cut are over-leveraged and would not be able to survive this crisis with any realistic fix.

-- Patrick Wylie, Seattle

Raise the rates

After years of following a failed economic policy that has resulted in the worst recession since the Great Depression, the Federal Reserve is up to its old ways, as if they can't conceive of anything else.

Lowering interest rates to the point of absurdity is exactly what got us into this mess in the first place.

Where's the incentive now for anyone to put money in the bank, with interest rates on savings at the lowest level in my lifetime? Why save, the banks tell us, when you can charge everything and continue to accrue more debt than you can afford?

I'm not an economist, but it seems obvious that capitalism needs capital. We need a reason to put money into a bank. We cannot spend our way to prosperity. Loans only make sense when cash is available to cover debt. Interest rates must be raised, or all our economic woes will simply continue.

-- Alan Moen, Entiat