Treasury Secretary Timothy Geithner is now scheduled to announce the Obama Administration's "Financial Stability Plan" on Tuesday, February 10, 2009. Speculation and rumors abound in Washington. Important elements of the plan are apparently still being debated within the Administration.
Reportedly, the plan may include:
Expanding the Federal Reserve Board's Term Asset-Backed Securities Loan Facility (TALF) to include federal support for both commercial and residential lending. NAR has strongly urged Secretary Geithner to expand TALF to include commercial lending.
Subject to rules still being developed, guaranteeing banks against certain losses on loans, including mortgage loans. One goal is to attract more private investment in banks, which would stabilize the capital position of banks and allow them to make more loans.
Using $50-100 million from the remaining Troubled Asset Relief Program (TARP) funds to help home owner occupants avoid foreclosure. NAR supports the goal of minimizing foreclosures to help keep families in their homes, protect communities, and minimize increasing the inventory of homes for sale.
Purchasing troubled assets from banks to stabilize their financial condition and enable them to make more loans. NAR has urged government officials to get TARP back on track, including the purchase of troubled assets to help unclog the credit markets and establishing an interest rate buy-down program.
Making additional federal investments in banks, in exchange for securities convertible into common stock, which could give the government power control over banks that are remain troubled. The additional investment would come with conditions on the use of the additional funding.
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