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Expert: Rescue Plan Should Help Credit Pinch

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Sep 29, 2008 7:06 am US/Mountain

Expert: Rescue Plan Should Help Credit Pinch

DENVER (CBS4) ― A University of Denver financial expert said Sunday the financial rescue plan expected to be approved by Congress this week is not a blank check. He said there will be more responsibility put on those institutions and more oversight.

Ron Rizzuto added the plan is also a step to try to make people's financial future a better one

Rizzuto said if the new and improved rescue plan works, the $700 billion bill won't come out of the taxpayers' checkbooks. The government will sell bonds to foreign governments and investors in order to get money, Rizzuto said.

Uncle Sam will then buy bad mortgages and try to re-sell them. The hope is the plan gets the economy rolling again and people who want to by cars or homes or pay for college will have a better chance of borrowing.

The difference now is that borrowers will have to prove they can pay it back.

"You're going to find there's going to be more availability of credit so people who have good credit ratings, businesses that are stable credits, they'll be able to access the borrowing market, where it's come to a screeching halt to a large degree over the last few weeks," said Rizzuto.

Giving the government power over the bad mortgages also means there will be more power to restructure the loans.

Finance experts said anyone who is in jeopardy of foreclosure or already in it may be better off dealing with the government rather than the financial institutions.

(© MMIX CBS Television Stations, Inc. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.)

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