Why Shah Gilani's Plan to Fix the U.S. Housing Market is a Winner

Money Morning Contributing Editor Shah Gilani told us last week that if something isn't done now to fix the U.S. housing market it'll "drag the rest of the economy down into a hellish bottom that will take years, if not decades, to crawl out of ." "The housing market is our single-most important generator of gross domestic product (GDP) and, ultimately, national wealth," said Gilani. "And we can almost immediately execute a simple plan to fix mortgage financing and stabilize U.S. housing prices." Gilani outlined steps the U.S. government needs to take to resuscitate the U.S. housing market, including unwinding Fannie Mae (OTC: FNMA ) and Freddie Mac, making bailed-out banks contribute to a private national pool of mortgage capital, and creating a new ratings agency to assess the creditworthiness of mortgage pools - with a tax on the pools' interest. He also called for more up-front money from borrowers, and for a tax-incentive program to stimulate buyer demand and stabilize the housing market.