Legislation authorizing the U.S. Treasury Department’s purchase of $700 billion in mortgage assets has been signed into law by President Bush.
| H.R.1424, the Emergency Economic Stabilization Act of 2008, was signed today by the president after passing earlier in the U.S. House of Representatives by a vote of 263 to 171.
Today’s passage and signing followed a 74 to 25 approval vote in the Senate on Monday. The original House proposal died in a vote Monday. Chills ran through Wall Street, which sent the Dow Jones Industrial Average tumbling more than 700 points. An emboldened Treasury Secretary today said challenges posed to diverse institutions require that rescue package tools be deployed “in combination with the tools the Fed, the Treasury, the FDIC and other bank regulators already have, in a variety of ways that addresses each of these needs and restores the ability of our financial system to fuel our broader economy.” The bill provides for a $700 billion Troubled Asset Relief Program to be used by the Treasury to purchase illiquid mortgage assets. It also includes a provision to raise federal insurance for bank and credit union deposits to $250,000 from $100,000.
|
clockwise: Nancy Pelosi, Harry Reid, George Bush and Henry Paulson
|
The House approval quickly prompted praise from the Mortgage Bankers Association.
“This will enable financial institutions to offer credit so individuals can purchase homes and other items and businesses can continue to operate and grow,” MBA Chief Operating Officer John A. Courson said in a statement. “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.”
Business Roundtable, an association of CEOs of leading U.S. companies with annual revenues of $4.5 trillion and nearly 10 million employees, also issued an announcement commending passage of the bill.
The legislation was designed to provide stability and prevent disruption to the fragile U.S. economy and financial system. In addition, the bill provides incentives for energy production and conservation. It also provides individual income tax relief.
“We will move rapidly to implement the new authorities, but we will also move methodically,” Paulson added. “In the coming days we will work with the Federal Reserve and the FDIC to develop strategies that deploy these tools in an expedited and methodical way to maximize effectiveness in strengthening the financial system, so it can continue to play its necessary and vital role supporting the U.S. economy and American jobs.
“Transparency throughout this process will be important.”
A statement earlier from Bush earlier indicated a crisis had been averted.
“There were moments this week when some thought the federal government could not rise to the challenge,” Bush said in a prepared transcript. “We have acted boldly to help prevent the crisis on Wall Street from becoming a crisis in communities across our country. We have shown the world that the United States of America will stabilize our financial markets and maintain a leading role in the global economy.”
The HOPE NOW Alliance issued a press release saying legal impediments will be reduced for servicers that adjust existing loans — enabling its members to accelerate foreclosure prevention activity.
House Speaker Nancy Pelosi said in a statement after the Senate’s passage Wednesday, “Times of crisis demand decisive bipartisan action and I welcome Senate passage of the economic rescue plan, which includes robust safeguards to ensure that taxpayers are protected through oversight and accountability.”
Related:
Senate Passes Fatter Bailout Package
The U.S. Senate passed its own version of a $700 billion mortgage bailout package.
Bailout Defeat Sends Stocks Crashing
The Bush administration’s mortgage bailout bill has been defeated in the House — sending the stock market crashing. Republicans blamed a viscous partisan speech by House Speaker Nancy Pelosi for the collapse.
