TITLE I - Authorizing the Treasury Department to Buy Mortgage-Related Assets
Sec. 6. Maximum amount of authorized purchases. (15 Comments)
The authority of the Secretary to purchase troubled assets under this Act shall be limited to $700,000,000,000 outstanding at any one time, by aggregating the purchase prices of all troubled assets held and any expenditures made under section 10(a).
15 comments on Sec. 6. Maximum amount of authorized purchases.
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This is interesting: It was presented as a $700 billion one-time thing, rather than "at any one time", which seems to imply multiple opportunities to spend that limit.
posted by James Newman at September 22, 2008 -
So, this is a revolving credit line. He could spend $2.1T and sell it for .30 on the dollar before he hits the limit.
posted by Another Taxpayer at September 22, 2008 -
So let me get this straight, the treasury would buy up 700 billion worth of assets, sell them at a loss stiffing the tax payer, and then buy up 700 billion more? There should be some kind of limit, or else shell/subsidiary companies can be made and money laundered through them.
posted by Concerned Citizen at September 23, 2008 -
Yes, it is a revolving credit. However, the program is designed to prevent losses from sales of securities by giving the government equity in the companies participating in the program. If that works, then the original $700 billion will simply be recycled through the program; i.e., no additional funds will be needed.
posted by Mithras Invicti, blog Fables of the Reconstruction at September 23, 2008 -
sounds like "outstandang at any one time" should be deleted to imply a $0.7 Billion aggregate maximum?
posted by Anonymous at September 23, 2008 -
Unless we're sure that $700 billion will be enough to fix the underlying problem, I think a revolving credit (with the equity stake protection) is the way to go.
posted by Mithras Invicti, blog Fables of the Reconstruction at September 23, 2008 -
why not just give the homeowners' that are real victims - a direct reduction in their mortgages?
posted by Pat at September 23, 2008 -
Why is it $700B? The estimates that I have seen suggest that total mortgage losses should not exceed $1.5T. Some estimates are as low as $1T. This is a revolving credit line, so it can keep buying things after it sells them. Given that it is only fair that the banks take most of the losses, $700B seems very excessive. Why not grant some lower amount, like $50B or $100B for now. After seeing how well this program works, congress can always increase it later. It will be much harder to decrease it.
posted by James Whiting at September 23, 2008 -
Mithras - my apologies, I see what you mean. "shall be limited to $700,000,000,000 outstanding at any one time" = a $700B credit limit.
posted by James Newman at September 23, 2008 -
The amount should be limited to a significantly smaller number ($25b or $50b?), with the Secretary required to come before Congress to request further funds each time. We've got to realize that this will incur an astonishing amount of debt on the United States and will impact interest rates on our debt going forward. We can't afford to do this sloppily and the Secretary should be required to report progress and demonstrate that the program is worth funding repeatedly.
posted by Sean Robertson at September 23, 2008 -
Would $700 billion be enough to pay off all the mortgages in the US? Let's give it directly to the homeowners, to pay off the principle on as many mortgages as possible, and reinstate depression-era regulations that were gutted.
posted by Wendy Barth, Green for Congress, IA 2nd District at September 26, 2008 -
Please make sure that nothing goes to ACORN, an evil organization that Obama was with getting loans to subprime borrowers that got us into the mess in the first place.
posted by Anne Farrelly at September 26, 2008 -
Anne Farrelly's comment belongs under section 5.
posted by Brian Hitchcock at September 28, 2008
My response does also.
What would lead anyone to imagine that any of this might go to ACORN, or any other grantee who would misuse funds? The act enabling the Housing Trust Fund allocates funds only to "states, indian tribes and localities", who in turn make grants to "grantees" who must satisfy stringent requirements for what the funds can be used for, along with reporting and auditing requirements. That act also has provisions for the [state, indian tribe or locality] to revoke the grant and demand repayment if any funds are improperly expended. Putting the profits into the Housing Trust Fund automatically gives that money an oversight framework. -
What is this about ANY ONE TIME? What does that mean?
posted by Marc Adams at September 28, 2008 -
Change the wording to read, "only $700,000,000,000."
posted by Craig Bryant, Citizen at September 28, 2008