Emergency Economic Stabilization Act of 2008 : Watching what the other hand is doing

Housing and Economic Recovery Act of 2008 along with the Emergency Economic Stabilization Act of 2008 hopes to get the economy going. The Housing and Economic Recovery Act of 2008 creates a new agency, the Federal Housing Finance Agency to have oversight over the government enterprises impacting housing.

Emergency Economic Stabilization Act of 2008 provides guidance to the Secretary of the Treasury in its limitation when bailing out the private sector property acquisitions. Of course, the huge undertaking will allow the Secretary to bring in contractors for purchasing and selling these troubled assets. Certain federal acquisition regulatory provisions (including provisions impacting minorities) will be waived by the Secretary for these contractors because of the compelling nature of the bailout and its urgency.

Furthermore, to mitigate the foreclosure crisis, the Secretary will attempt at brokering deals with holders of mortgages with the program HOPE for Homeowner. The goals are to begin creating jobs, preventing future foreclosures, building interest in home ownerships and paying down the national debt . Military families will benefit from an extension of 9 months rather than the 90 days foreclosure proceedings while overseas.

For some homeowners facing foreclosures, lenders will have the option to modify loan with reduced interest rate and or reduced principals and the lenders with loan guarantees. New homeowners will be enticed with a $7,500 credit to purchase foreclosed home under the new rules for selling homes and home builders will be interested in the funds set aside for communities to rehab homes that are sitting in foreclosed neighborhoods as well as tax credits.


The $700 billion bailout plan gives the Secretary of Treasury certain authority for purchasing and insuring troubled assets:



The act provides authority for the Secretary of the Treasury to purchase and insure certain types of troubled assets for the purposes of providing stability to and preventing disruption in the economy and financial system and protecting
taxpayers, and for other purposes.

Secretary of the Treasury is authorized to establish a TARP: TROUBLED ASSETS RELIEF PROGRAM and to purchase from any troubled financial institution residential or commercial mortgages and any securities, obligations, or other instruments that are based on or related to such mortgages, that in each case was originated or
issued on or before March 14, 2008, the purchase of which the Secretary determines promotes financial market stability; and

any other financial instrument that the Secretary, after consultation with the Chairman of the Board of Governors of the Federal Reserve System, determines the purchase of which is necessary to promote financial market
stability, but only upon transmittal of such determination, in writing, to the appropriate committees of Congress.


Oversight will be conducted by several committees with different responsibilities and mandating written reports from these committees. A regulatory report by one of the committees is due by April 30, 2009 by the Secretary for a written report on the Secretary assessment of the governments impact on the troubled financial situation and recommendations for future effectiveness in achieving the long term goal of the bailout:

The Secretary shall review the current state of the financial markets and the regulatory system and submit a written report to the appropriate committees of Congress not later than April 30, 2009, analyzing the current state of the regulatory system and its effectiveness at overseeing the participants in the financial markets, including the over the-counter swaps market and government-sponsored enterprises, and providing recommendations for improvement, including—
(1) recommendations regarding—
(A) whether any participants in the financial markets that are currently outside the regulatory system should become subject to the regulatory system; and
(B) enhancement of the clearing and settlement of over-the-counter swaps; and
(2) the rationale underlying such recommendations.


With this granting of authority, the Secretary shall in exercising the authorities granted in this Act, take into consideration—
(1) protecting the interests of taxpayers by maximizing overall returns and minimizing the impact to the national debt;
(2) providing stability and preventing disruption to financial markets in order to limit the impact on the economy;
(3) the need to help families keep their homes and to stabilize communities; (4) in determining whether to engage in a direct purchase from an individual financial institution, the long-term viability of the financial institution in determining whether the purchase represents the most efficient use of funds under this Act;
(5) ensuring that all financial institutions are eligible to participate in the program, without discrimination based on size, geography, form of organization, or the size, type, and number of assets eligible for purchase under this Act;
6) providing assistance to financial institutions, including those serving low- and moderate-income populations and other under served communities, and that have assets less than $1,000,000,000, that were well or adequately capitalized as of June 30, 2008, and that as a result of the devaluation of the preferred government-sponsored enterprises stock will drop one or more capital levels, in a manner sufficient to restore the financial institutions to at least an adequately capitalized level;
(7) the need to ensure stability for United States public instrumentalities, such as counties and cities, that may have suffered significant increased
costs or losses in the current market turmoil;
(8) that nothing in this Act prevents the Secretary from protecting the retirement security of Americans by purchasing troubled assets held by or on behalf of an eligible retirement plan other than a plan described in section 409A of the Internal Revenue Code of 1986; and
9) the utility of purchasing other real estate owned and instruments backed by mortgages on multifamily properties.