Emergency Economic Stabilization Act of 2008 - Talking Points

I received the following talking points via BIA OC, that summarize the recently past bill, today from Gregory S. Brown with the NAHB Governmental Affairs office.

Gregory offered the following summary:

“The attached talking points were crafted by the folks in Public Affairs and cover the economic stabilization legislation - the Emergency Economic Stabilization Act of 2008 - signed into last Friday by the President.  They should be useful for you in discussing the legislation.

To sum up briefly what these talking points say - in the immediate term this package is more about keeping worse things from happening than it is about helping good things return.  The stabilization legislation is intended to prevent a total collapse of the financial system by allowing banks to sell off some of the assets with which they are ‘stuck’ in order to free up capital that can be used to lend again.  The ability to lend again will allow businesses – including home builders – and households to get loans and stay afloat, keep households buying and jobs available.  This latter, direct-benefit to home builders can only result if the first issue is addressed.

The talking points articulate in more detail the connection between the stabilization bill and the housing markets.  I hope this is helpful.  Let me know if I can provide additional information.”

Here are the talking points prepared by NAHB Public Affairs the week of October 6, 2008:

Financial Rescue Plan Helps Stabilize Markets

• Our global financial system is facing its biggest challenge since the Great Depression.
• Extraordinary times call for extraordinary measures.
• To paraphrase Fed Chairman Ben Bernanke, “There are no atheists in foxholes and no ideologues in today’s financial crisis.”
• Indeed, the sheer magnitude of the crisis – the huge stakes that are involved – required America to set aside partisan politics and come together on a plan in an effort to restore order and help revive confidence in global financial markets.
• Let’s be clear: NO ONE likes the idea of a bank bailout.
• But in reality, this crisis has already spilled over to Main Street.
• With the flow of credit seriously curtailed for home buyers, student loans, housing and other business sectors, Congress had no other choice but to act.
• The legislation approved by lawmakers was absolutely essential to prevent a collapse in our financial system that would have inflicted devastating damage to our economy.

Rescue Package Will Take Time to Implement

• President Bush signed the rescue package into law last Friday.
• But enactment does not mean that we are out of the woods yet.
• After signing the bill, Bush said that it will take some time for the legislation to have its full impact on the economy and that “it cannot be accomplished overnight.”
• In the weeks and months ahead, this rescue plan should help stabilize financial markets, get bad mortgages off banks’ balance sheets and pave the way for home values to stabilize and consumer confidence to start building back up again.
• As the President said, things aren’t going to return to normal overnight.
• But it puts us on the right track instead of one leading off a cliff.

Housing Stimulus Legislation

• This summer’s historic housing stimulus bill turns out to have been a very smart move.
• Among other things, that bill gave the U.S. government the authority to take over our two largest providers of home mortgage capital, Fannie Mae and Freddie Mac.
• Treasury Secretary Hank Paulson noted that, had this not been the case, the financial market meltdown could have been that much worse.
• Critical elements of the bill should help the housing industry as we pull out of the current downswing.
• Key among these elements is the first-time home buyer tax credit and much-needed FHA reform.
• Some have criticized the tax credit on the basis of its payback provisions.
• But a $7,500 no-interest loan is not a bad deal by any means.
• We just need to make sure people know about. NAHB has set up a Web site for consumers to learn more at www.federalhousingtaxcredit.com.
• There is also a Spanish-language version on the Web site as well.

Stabilization in New Home Sales

• Once the financial rescue plan has had a chance to kick in, we expect to see some improvement in housing market conditions.
• In short, we appear to be approaching the bottom of this cycle.
• The rate at which home values have been declining is already slowing down, and we should see the rate of foreclosures begin to taper off in the not to distant future.
• But don’t expect an immediate or sharp upturn in the housing market.
• It’s going to take some time to get credit markets and the banking system functioning again … to rebuild confidence … and to get the housing market moving again.

Long-Term Outlook Favorable

• Without trying to minimize the problems we have today, it’s important to keep your eye on the big picture.
• Over the long-term, the U.S. is definitely on a growth path.
• Our population will rise by about 35 million over the next 10 years. All of those people will need someplace to live. Consider these facts:
• America currently has about 105 million occupied housing units.
• About 70 million of those are owner-occupied.
• The other 35 million are rental units.
• Total equity (value of homes minus any mortgage debt) amounts to $9 trillion.
• 37 percent of all home owners own their home outright, with no mortgage debt.
• And for those who have mortgages, 94 percent are making their payments on time every month.
• Home values will ultimately bottom out and start edging back up.
• Once we turn the corner on the housing downturn, the longer term housing outlook is very promising.