Hello Everyone,
The Financial Services Committee of the House of Representatives has reached a tentative deal for the much anticipated federal bailout. You may get the full text of the document on financialservices.house.gov.
After reviewing the legislation, I picked up on the following important provisions of the bill. I tried to describe the complex concepts in terms that everyone can understand.
Important Provisions of Bailout Bill
TARP: Troubled Asset Relief Program Established
Purchase of Troubled Assets: Authority to purchase troubled assets from financial institutions and provisions to ensure that un-just enrichment of financial institutions does not occur.
Insurance: Establishes a program to insure troubled assets. Premiums would be paid to the government in return for insuring all of the trouble assets in the program against default.
Sale of Purchased Assets: Government has the authority to re-sell any assets purchased at a price that the Government determines at a later date.
Foreclosure Mitigation Efforts: Government may use loan guarantees and credit enhancements to facilitate loan modifications to prevent avoidable foreclosures.
Making Loan Modification Requests: Homeowners with troubled mortgages may get their interest rates reduced, loan principal reduced, or term of mortgage extended (among other measures) in an effort to avoid foreclosure of assets that the Government has purchased.
Executive Compensation Limits: Applies to the Executives of Corporations who sell troubled assets to the Government.
Encouragement of Private Sector Purchases: Government will encourage the private sector to help purchase some of these troubled assets to limit the cost to the tax payers (possible investment opportunity).
Market Transparency: All purchases made as part of this bailout bill will be made public and show details as to price, amounts, and description of assets purchased. Additional disclosure of the financial health of institutions who sell troubled assets to the Government.
Increase in Public Debt Level Limit: The limits to the United States public debt level will be increased to 11.3 Trillion dollars.
Authority to Suspend FASB 157 Accounting Rule: This is a new accounting standard that requires companies holding financial instruments to mark their portfolio to the market value (current price) of the securities. This may be suspended to avoid further losses in financial institutions.
Kind Regards,
Manolis Sfinarolakis
Keller Williams Action CT Realty
Real Estate Agent
203-232-2462
Servicing All Of CT and Parts of NY
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