Economic stabilization package passes House by a 263-171 voteMortgagePress.comHR 1424, Emergency Economic Stabilization Act of 2008, FDIC, NCUA
The United States House of Representatives has announced the
passage of HR 1424, the Emergency Economic Stabilization Act of
2008. The bill passed the House by a vote of 263-171. It passed the
Senate on Oct. 1 and will head to President George W. Bush for his
signature. HR 1424, which establishes a program at the Treasury
Department to purchase distressed mortgage-related assets, also
includes the extension of several tax provisions that will help
steady the American economy.
"There were moments this week when some thought that the federal
government could not rise to the challenge," said U.S. President
Bush. "But thanks to the hard work of members of both parties, in
both houses, and the spirit of cooperation between Capitol Hill and
my administration, we completed this bill in a timely manner."
HR 1424 will allow the Treasury to purchase up to $700 billion
in distressed mortgage related assets from financial institutions
in an effort to increase liquidity and restart the seized credit
markets. The true long term cost of the program may be far less
than $700 billion as the Treasury has the discretion to redeem or
sell the assets, sometimes at a profit, when the market recovers.
The bill would also temporarily increase the amount of deposit
insurance provided for individuals by the Federal Deposit Insurance
Corporation (FDIC) and National Credit Union Administration (NCUA)
to $250,000.
"The ongoing credit crunch has severely impacted the ability of
individuals and businesses of all sizes to borrow, and has
threatened to slow down the entire U.S. economy," said John A.
Courson, chief operating officer of the Mortgage Bankers
Association. "We very much appreciate the hard work and long hours
that Congressional and Administration negotiators have put in over
the last several weeks and look forward to the quick implementation
of the program. This will enable financial institutions to offer
credit so individuals can purchase homes and other items and
businesses can continue to operate and grow."
The bill also extends a number of tax provisions that were due
to expire. Among them are:
• Deductibility of forgiven mortgage debt;
• $1,000 property tax deduction for non-itemizing
couples;
• Deductions for energy-efficient commercial
buildings;
• Allowance for expensing of brownfields environmental
remediation costs; and
• Accelerated cost recovery for qualified leasehold
improvements.
"I know some Americans have concerns about this legislation,
especially about the government's role and the bill's cost," Bush
said. "As a strong supporter of free enterprise, I believe
government intervention should occur only when necessary. In this
situation, action is clearly necessary."
"These tax provisions are important to residential, multifamily
and commercial borrowers and lenders and will encourage expansion
in the real estate sector which can be the engine to drive economic
growth in this country," said Courson. "A number of them are items
that MBA has fought for over a number of years and we are pleased
that Congress passed them before they expired."
For the latest information on this bill, click here.
