Two Minutes with Todd - Weekend Edition 10.5.08

Hi Team,

This is a special Weekend Edition of Two Minutes with Todd - titled "Bailout 101" aka - what do you need to know about the new $700 billion bailout signed into law last week by President Bush.

For those of you what want more than a few minute summary of the 451 page H.R. 1424 here is the link: click here.

My goal is to just highlight a few points:

1) This is really designed to attack the credit crisis. The primary issue is lack of liquidity of assets (meaning they can't sell them because there are no buyers). This authorizes the United States Treasury to have access to $700b over time, $250b immediately to start purchasing these troubled assets. They will primarily consist of mortgage related assets. Banks will now have a buyer for these assets. This should add liquidity in the marketplace.

2) The government will protect taxpayers by setting up an insurance program that will guarantee the assets being purchased. They financial institutions will fund this program. H.R. 1424 also allows for future bills to be introduced to recover any net loses from the financial industry after five years. It could potentially allow for the Treasury to take financial ownership in companies as compensation.

3) Some of the biggest outcries from the public have been over executive pay. This bill limits compensation. One additional stipulation is that bonuses will have to be repaid if it is found that the participating company has provided inaccurate profit statements.

4) Who is going to watch over this money? Good question as many of the positions will be changing after the election. That said the two oversight committees are: a) Financial Stability Board made up of the Fed Chairman, SEC Chairman, HUD Secretary, Treasury Secretary, The director of the Federal Home Finance Agency. b) This Financial Stability Board will report to a Congressional Oversight Panel consisting of five members of both parties from the House and Senate leadership.

5) In order to get the bill through the house on the second vote there were some changes made to the original bill. They include raising the FDIC limit on insurance from $100,000 per depositor per institution to $250,000. Again this is to shore up the liquidity of these institutions by keeping the cash there to lend. Additionally there were tax breaks that were added or extended such as the Alternative Minimum Tax (AMT) relief for the middle class, some renewable energy taxes and other expiring tax breaks.

October 1st was the official start date for the Hope for Homeowners program. The new guidelines are out. We will be working with homeowners who owe more than their home is worth, have ARMs that are adjusting, or are facing foreclosure. Please refer anyone you know in these situations to our office ASAP. They need our help.

As always please let me know if you have any questions or concerns.

Best regards, Todd

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Todd Bookspan The Optus Group at AMA inc. 602-522-9494