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Why Can't We Take a Dip in Our Retirement Pools?


Prudent citizens should be permitted to use 401ks, IRAs to pay down housing debt.

Editor's Note: Adam Heine is president of Camden Securities Company and founder of Great Hill Investments, LLC. This is his first article for Minyanville.

I believe it's about time the Obama administration allows those citizens who have prudently saved their earnings to use it without penalty to pay down their own mortgage debts.

The housing market has been at the heart of the leverage crisis. So let's get some sort of plan that allows individuals to pay down their housing debts with their own good capital instead of having the government waste any more of the taxpayers' money on American International Group (AIG), General Motors (GRM), and Bank of America (BAC).

Many of those who invested in a 401k or an IRA got hit hard in the capital markets over the past 1.5 years while doing what was asked of them: saving. The only protection was to be in a stable-value fund, which actually runs counter to the theory supporting these plans. Approximately 35-40% of the funds invested in the US capital markets are from retirement plans.

I suggest that, without penalty, the government allow those prudent individuals to withdraw funds from their retirement accounts to pay down their mortgages.

The mutual-fund industry would certainly get hit. But the banks -- and ultimately, the economy -- would benefit, as people would be relieved of debt burdens and have more discretionary income.

With the imminent threat of inflation staring everyone right in the face, a few things are certain: On the whole, individuals have little or no wage growth; unemployment continues to rise, and the cost of living is only increasing.

The increase in commodity prices over the last few years was fueled by both personal and institutional leverage. Prices are now rising due to inflation from government intervention, coupled with demand from the growth of emerging economies. However, companies and households no longer have access to credit with which to absorb higher prices. The stock market might have put in a bottom, but energy prices are rising, the cost of living in general has remained high, and the banks haven't really come back to lending to Main Street.

I respect the idea that there are some institutions too big to fail. However, the cost to taxpayers has been huge, and little aid has been given to those who actually save. The threat of higher taxes is only going to be an additional burden in covering the expense of residential mortgages.

Let's see the government start rewarding those individuals who do what the government asks of them.
No positions in stocks mentioned.
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