With the passage of the Emergency Economic Stabilization Act , the $700 billion bailout, the President's Working Group on Financial Markets has been established. Today the Treasury Department put out a press release describing the broad range of resources that is being used to search solutions for the growing economic crisis.
The working group is coordinating national agencies and cooperating with world wide market participants and regulatory agencies to restore stability in the global market.
•· Treasury, the Federal Reserve and the FDIC are using the powers in the EESA (the bailout bill) to strengthen financial institutions by improving balance sheets of those institutions and to improve "market functioning."
•· The FDIC will use authority to address failing banks, to insure depositors and to maintain the stability of the financial system. This includes exercising the authority under the systemic risk exception, that allows the FDIC to exceed normal expenditure limitations to protect major bank failures. Such a need has arisen with Wachovia.
•· Treasury will implement new authority to purchase bad mortgage securities to restore capital and to remove the burden of non performing assets
•· The Federal Reserve is researching new ways to restore market liquidity, including paying interest on reserves.
•· The Treasury is offering temporary guarantees of money markets and the SEC has modified guidance on valuations of assets
•· The GSE's are increasing their purchase of mortgage backed securities
•· To help restore market integrity, regulators and investigators are increasing their investigation of high level bank fraud. Fannie and Freddie have just announced their subpeonas.
The problem at one time was thought to be limited to New Century, a subprime lender. Then it was thought to be a subprime crisis. As the problem grew it became an Alt A problem, then a housing and a mortgage meltdown. It was thought that the US economy was basically sound. The problem was restricted to the financial markets.
The credit crisis in now a worldwide crisis, with bank failing in several countries, with entire national economies strained. It is impacting all levels of the world economy.
The response outlined in today's Treasury press release and today's Federal Reserve announcements coupled with the actions by the European nations testify to the urgency and gravity of the problems.
Richard Smith
American Acceptance Mortgage, Inc
Toll Free 888-474-9920 Cell 423-280-0345
Home financing in Tennessee, Georgia, and Alabama.
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Thanks for the update wow we just gave these guys a lot of power I wonder how many people are aware of this.
Catherine,
Thanks for the comment. I will email you about the signature.
Richard
Richard,
Thanks for the post. Interesting to see how this plays out. I had a discussion with a wall streeter, who says that the $700 billion is far short of what is really needed.
Richard, Interesting post. Like so many other Americans I want to see how much this is going to cost me and also to see if this is going to work or is this going to be business as usual in DC...
Richard - Great post. THis is just a run on the banks because of the totla lack of confidence. It's a great investment opportunity if you have any cash. The local and regional banks are doing great. It's just the investment banks who had very little oversight that got in trouble. Fannie May was the biggest financial disaster of all time, and the guy who caused it is still not in Jail. i guess it pays to have the Clintons and Obama as your friends.