To the Editor:

Part of Treasury Secretary Geithner's plan involves enticing private-equity investors to buy troubled assets with U.S. government guarantees.

I would like to suggest an approach that will mitigate the expected losses on the toxic mortgages that are the underlying assets of these troubled assets. The key is in enhancing the borrower's ability to avoid default and make the monthly mortgage payment.

The risk of default is always considered in the determination of asset value. Mr. Geithner's plan could be enhanced with the addition of a financial guidance program that will lower the risk of loss. The program should function similar to the safe-driving education courses that high school students take in order to lower their auto insurance premiums.

Such a program would lower the rate of failure and thereby lower the loss potential. In fact, it could actually turn this crisis around by increasing the valuations of the troubled assets.

We should acknowledge that the financial ignorance of borrowers contributed to this economic crisis.

Without an awareness of how to handle and manage money, we can expect a repeat. This lack of understanding of money is the elephant in the room.

Borrowers are in desperate need of financial guidance in this complex economic environment. We must develop a program of immediate and specific financial guidance that will help borrowers make the monthly mortgage payments. What I'm proposing is not a so-called financial literacy initiative, which simply disseminates information and takes forever to complete, but rather a program that will help borrowers understand how to manage money in the shortest possible time and avoid the pitfalls that have previously caused financial distress.

As the borrowers are successfully guided to avoid default, the financial and housing markets will respond favorably. The result will be a reversal of the downward trend in the valuation of the troubled assets.Samuel D. Bornstein
Professor of accounting and taxation
Kean University School of Business
Union, N.J.

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