TARP Stretching
Parallel universe time. The Labor Department’s 240K job loss report, more than 10,000 home foreclosures a month, and the Big Three Detroit auto maker meltdown of the century make it a lame-duck moment like no other. We have cash burn among venerable economy-making companies suddenly sizzling at a rate akin to the wealth burn in household balance sheets. We have a Congressional balance reset coming in January 2009, a transition government, and issues that worsen half-day by half-day and can’t wait for Inauguration Day.
The aisle to reach across at this point is not merely idealogical, but temporal. The moment calls for the incoming President-elect Barack Obama team reach across time to work with those who have been voted out of office but who continue to hold the reins on action and policy to do what can be done in the days and weeks up to the formal change over.
- The New York Times reports, Emanuel Urges Aid for Auto Industry.
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Source: The Wall Street Journal
For the Wall Street Journal’s take on how President-elect Obama and chief of staff designee Rahm Emanuel are being drawn into the arena of consideration to applying $25 billion in Troubled Asset Relief Program dollars as emergency funding for very troubled auto makers, see Pelosi, Reid Press for TARP Aid for Auto Industry.
Though the administration is reluctant to widen the program to cover autos, there has been discussion among Bush officials of expanding use of the $700 billion to buy equity stakes in a range of financial-sector companies, moving beyond just banks and insurers. The focus would be on assisting companies that provide financing to the broad economy, such as bond insurers and specialty finance firms such as General Electric Co.’s GE Capital unit, CIT Group Inc. and others, individuals familiar with the matter said.
So, after all, an ongoing 24/7 effort among large home building companies to rally support for a temporarily implemented home buyers’ catalyst–a tax credit of $10,000 to $22,000 and a lowering of home mortgage rates to below 3%–may make it onto the Congressional radar, if not into a lame-duck stimulus measure.
- Builder and Big Builder have each written about the Fix Housing First Coalition and initiative, and Builder editor Boyce Thompson has weighed in with impressions on the efforts merits in a blog post, The Next Housing Boost. Thompson writes:
If you believe that reigniting home sales is the key to an economic turnaround, as many builders do, maybe a big credit coupled with mortgage-interest reductions is the way to go. If you are a Congressman running for re-election at a time when people are losing jobs left and right, maybe you think a big public works program would be a better option. But spending more on roads and bridges, while it may make a lot of sense from a public policy perspective, isn’t going to fix the problem that we have with downwardly spiraling home prices.
The builder coalition, which seeks to raise $7 million for a major lobbying effort, believes that the key to an economic recovery is to create positive home sales momentum. If the government makes the deal sweet enough, people will buy homes again; and rising demand may curtail declining home values. Maybe then lawmakers will be able to stem a rising tide of foreclosures and falling home prices that are at the root of the financial industry’s problems.
The biggest hurdle of the effort is how home building’s biggest players can make their appeal in such a way as to not come off as a bunch of cry babies who are unwilling to take their medicine after doing so well during the earlier years of the decade. The car companies can appeal to Congress for their impact on jobs; home builders must broaden their ranks so that their appeal to a lame-duck Congress will address urgencies at the Main Street level rather than bailing out a specific industry sector.
- CNBC real estate analyst Diana Olick–a guest moderator at last week’s Big Builder ‘08 Conference–takes on analysis of prospects that new measures will allow bankruptcy court judges to modify home loans in an effort to stall foreclosures and put a floor under home prices.
For sheer story-telling and a heavy dollop of insight into the unhinged euphoria that compromised decision-making at the junction of real estate and financial services, have a gander at the New York Times story, The Reckoning, How the Thundering Herd Faltered and Fell, about Merrill Lynch’s rise and descent into inglory.
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[...] jmcmanus wrote an interesting post today onTARP StretchingHere’s a quick excerptCNBC real estate analyst Diana Olick–a guest moderator at last week’s Big Builder ‘08 Conference–takes on analysis of prospects that new measures will allow bankruptcy court judges to modify home loans in an effort to stall foreclosures … [...]
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[...] jmcmanus wrote an interesting post today onTARP StretchingHere’s a quick excerptCNBC real estate analyst Diana Olick–a guest moderator at last week’s Big Builder ‘08 Conference–takes on analysis of prospects that new measures will allow bankruptcy court judges to modify home loans in an effort to stall foreclosures … [...]
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[...] jmcmanus wrote an interesting post today onTARP StretchingHere’s a quick excerptCNBC real estate analyst Diana Olick–a guest moderator at last week’s Big Builder ‘08 Conference–takes on analysis of prospects that new measures will allow bankruptcy court judges to modify home loans in an effort to stall foreclosures … [...]