The survival of the U.S. economy depends on helping homeowners, said John Bogle, The Vanguard Group founder and former CEO.
“We once said, we have companies that are too large to fail and homeowners that are too small to bail,” Bogle told CNBC’s Erin Burnett. “We have to help the mortgage owners; that’s the only way to get around it.”
Bogle said mortgage modifications should be part of a homeowner bailout.
Video: John Bogle, The Vanguard Group founder & former CEO calls for a homeowner bailout.
“Rewriting the terms, the maturities, the payments, the interest rates all have to be part of that,” he said. “That’s going to be a tough job.”
Bailing out U.S. homeowners would require a large federal government staff, he said.
“I don’t think people have realized the major implications of the government having to run the economy,” he said.
Bogle also said the government is giving banks capital at a cheap price, said Bogle.
“The TARP program doesn’t even seem to be concerned, at the moment, about the acquisition of troubled assets,” he said. “Dubai would pay more than Washington, DC for capital in these banks,” he said.
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