The U.S. Congress needs to get out of 'pointing fingers' mode and pass legislation that is sensible and addresses the problem of impact of the financial crisis on the economy, Wilbur Ross Jr., chairman and CEO of WL Ross & Co. told CNBC's Asia Squawk Box.
What To Do Now:
And it needs to be done quickly. "I think the people who voted against it should be ashamed of what they did. In order to save a $700 billion investment -- not spending, but investment --they caused investors a trillion dollars. That means for each of the guys that voted against it, it cost the investing public $4 million today," Ross said.
Ross thinks that the U.S. is a lot worse off not passing the bill because of all the buildup in expectations leading to the vote.
"It would have been one thing if they never took up the bill. But to take it up with both the chairman of Fed and the Secretary of Treasury, both of whom are viewed as knowledgeable and respected people, say it was essential -- for the leadership of Congress to say it was essential and then turn it down is a real downer," Ross commented.
Ross believes that we will see consequences of the bailout's rejection in the money markets, the debt markets and the stock markets. The failure of the vote will simply make matters worse and ultimately cost more.
Going forward, Ross suggests that perhaps it may be better to share the pain. He says owners of affected mortgage should write them down at today's market value. Repayment schedules should be set such that borrowers will not pay more than 38 percent of their income. The government can then insure half the reduced mortgage, charge a fee and get one third of any appreciation and value of that house from the discounted price. The lender who made the sacrifice should get one third and the home owner one third.
"That I think would have dealt very directly with the mortgage crisis. They could have put in the same oversight, the same restrictions on executive pay, all those bells and whistles but at least then you'd have a big program, very fine tuned to address the actual problem which is unavailability of mortgages today," Ross added.