Update From The California Association of Realtors on the Financial Bailout
September 23rd, 2008 categories: Our Market
CA Association of Realtors
Monday, September 22, 2008
Brought to you by the CALIFORNIA ASSOCIATION OF REALTORS®
Sept. 22, 2008
Dear C.A.R. Member:
As promised, here is your first Market Matters Daily Briefing on the evolving financial situation impacting our nation. All this week, C.A.R. will be closely following developments in Washington and will be reporting to you, as needed, via this Briefing e-mail, and through C.A.R. Newsline, or Market Matters.
As expected, this weekend the U.S. Dept. of the Treasury submitted its proposal to promote stability in the U.S. financial markets.
Key components of the Treasury’s proposal include:
- The authority to issue up to $700 billion of Treasury securities to finance the purchase of troubled residential and commercial mortgage-related assets, including mortgage-backed securities and loans.
- This authority would expire in two years, and assets must have been originated or issued on or before Sept. 17, 2008, to qualify.
- Assets will be managed by private asset managers at the direction of the Treasury.
- Cash received from liquidating the assets will be returned to the Treasury’s general fund for the benefit of taxpayers.
- Funding for the program will be provided directly by the Treasury from its general fund by increasing its debt limit by $700 billion.
- Once the program is up and running, Treasury will provide updates to Congress semi-annually.
The proposal also grants Treasury Secretary Paulson sweeping authority regarding the purchase of assets, the timing and sale of assets, determining financial institutions’ eligibility to participate and more. To access a fact sheet on the Treasury proposal, go to http://www.treasury.gov/press/releases/hp1150.htm.
Congress is weighing in on the Treasury’s proposal today, and may seek to add an oversight structure, limit the compensation of executives at the companies benefiting from the rescue, and provide mortgage relief for struggling borrowers. We’ll report on this effort in detail tomorrow. As part of that process, House Financial Services Committee Chairman Barney Frank has scheduled a committee hearing this Wednesday.
Our sources tell us that it may be overly optimistic to expect final legislation to be brought forward by Friday and cautioned us to expect this to run into next week. Your Leadership Team will remain in close contact with elected officials and other key leaders in Washington to ensure that the interests of the real estate industry are represented. We’ll be ready to weigh in on the final legislative package, and will keep you informed.
Thanks to all who have shared their thoughts with me this past week.
Sincerely,
William E. Brown
2008 President
CALIFORNIA ASSOCIATION OF REALTORS®
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