What Are They Thinking !

Daily Real Estate News September 29, 2008House Rejects Financial Rescue !

Plan After a weekend of intense negotiations, the White House and Congress agreed Sunday on a plan for the biggest banking rescue in U.S. history. But the bailout plan was in doubt Monday after it fell short of the 218 it needed to pass the House of Representatives. Democrats voted 141 to 94 in favor of the plan, while Republicans voted 65 to 133 against, according to a news update from CNNMoney.com. In a statement issued Monday afternoon, the NATIONAL ASSOCIATION OF REALTORS® expressed disappointment that the bill didn't pass, saying the legislation "is critical to stopping the economic turmoil that millions of Americans are facing." "Across the country, REALTORS® see and feel the loss of confidence experienced by both buyers and sellers in the real estate market and they know firsthand that buyers are finding it harder to get mortgages," NAR President Dick Gaylord said. "This legislation, if implemented, would quickly restore liquidity to the mortgage market, which would stabilize the housing market and protect homeowners." The bill, which also would require approval from the Senate, would have allowed the government to buy as much as $700 billion in distressed financial assets from banks, freeing up the credit market so that loans will become more available. Struggling home owners also would get some reprieve, as the bill calls for the Treasury Department and other government agencies to modify home loans when possible to avoid foreclosures."I am confident this legislation gives us the flexibility to unclog our financial markets and increase the ability of our financial institutions to deliver the credit that will help create jobs," Treasury Secretary Henry Paulson said in a statement Sunday. He said the bill would provide the necessary tools to deploy up to $700 billion to address the urgent needs of the U.S. financial system—whether by purchasing troubled assets, insuring troubled assets, or averting the disorderly failure of large financial institutions. In a measure to protect taxpayers, the bill states that if the government has a net loss after five years, the president will have to submit a legislative proposal to seek reimbursement from the financial institutions that participated.The House of Representatives voted on the bill Monday, and the Senate is expected to consider it later in the week, possibly as early as Wednesday. "Quick, effective and bipartisan action sends a signal to investors large and small, here and abroad, that we are committed to taking the necessary actions to protect our financial system and our economy," Paulson said. In other news Monday, federal regulators said they had brokered a deal for Wachovia, the fourth largest bank in the U.S., to sell its banking assets to Citigroup. Shares in Wachovia crashed on Friday amid concerns over its exposure to subprime mortgage debt.Source: NAR, The Wall Street Journal, CNN.com, U.S. Department of the Treasury