Transcripts

"Money File"-South Floridians' Finances & The Financial Crisis

SUSIE GHARIB: In the "Money File" tonight, we asked people in South Florida what they wanted to know about their money and the bailout plan. Eric Schurenberg, managing editor at Money magazine, has the answers.

CAMILA ZAMORA, SOUTH FLORIDA RESIDENT: First, if they don't do anything, what's your perspective on what's going to happen? Which is the worst case scenario, I think? And the second is, if finally the government decides to do something, which is what they should do, in my opinion, how long is it going to take before the markets get better?

ERIC SCHURENBERG, MANAGING EDITOR, MONEY MAGAZINE: Wouldn't we all like to know when it will get better, Camila. Let me take the first part of your question. The worst case scenario is ugly. It's a kind of vicious cycle of default leading to tighter credit, leading to recession, leading to more defaults, which just starts the spiral all over again. Now if the government does fund a rescue plan and even if the plan works as hoped, you can't expect a rebound in stocks right away. Remember, the plan is about averting disaster in the credit markets, not about jump-starting the stock market. A mild recession could end next spring, in which case you might see stocks start climbing again this winter. A bad recession could last through next year, with no relief of stocks until 2010. But remember, Camila, these are just guesses. You have an investment plan, stick to it, and don't try to time the market.

HUGO ORTIZ, SOUTH FLORIDA RESIDENT: Well, one thing that I do want to know for sure is if the politicians are actually looking at the younger people and the middle class people, you know? A lot of people are going to be affected, especially the unprivileged people who could not pay their mortgage and that they were getting like adjustable rates. So I want to know if something is going to be taken -- like something is going to be done for them and if they're going to be taken care of.

SCHURENBERG: Hugo, as I said, the rescue plan the House voted on was all about averting a credit meltdown, not about helping people facing foreclosure, even though foreclosures are at the root of the credit crisis. The bill does require the Treasury encourage mortgage servicers to renegotiate loans with homeowners who need help, but that's about it. Now there are other plans out there designed to do more. The main thing is, if you're running into trouble on your mortgage, let the lender know right away or contact Hope Now at hopenow.com while there's still time to work out a plan that will let you stay in your home.

GHARIB: All right. Thanks a lot, Eric.