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Great News for American Taxpayers! But Really… July 10, 2009

Posted by John Watch in Uncategorized.
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Excerpts from HousingWire.com 

In a rare occurrence over last six months, we’ve finally received some good news coming from Washington about the economy. Yesterday, the House Finance Services Committee heard testimony on a bill for possible Troubled Asset Relief Funds (TARP) reinvestments.

HR 3068, or the TARP for Main Street Act of 2009, proposes to reinvest $6.5 billion to the home ownership and housing efforts. Public records show that as of June 30, the US Treasury Department issued $399 billion of the $700 billion TARP funds, which received back $70.1 billion from stock repurchases and $6.7 billion in dividend payments on preferred stock through the Capital Purchase Program.

The proposed $6.5 billion would be distributed as such;

  • $1 billion to build affordable housing
  • $1.5 billion for the US Department of Housing and Urban Development to distribute to state and local government for the redevelopment of abandoned and foreclosed homes
  • $2 billion in emergency mortgage relief  
  • $2 billion to HUD to stabilize multi-family properties that are in default or foreclosure or have recently been foreclosed.

As the initial $399 billion of the TARP funds have been distributed effectively, why is there an additional $1 billion being used to build NEW housing? With an additional $1.5 billion for ‘redevelopment?’ One of the critical factors of the housing bust was, and still is, the housing oversupply. At last year’s end, there was an excess of 5 million homes that needed to be absorbed. Why add on to this already incredibly high number?

Critics of the bill had this to say.

Rep. Spencer Bachus, R-Ala., in a statement on the bill, criticizes the $1.5bn that would go toward the Neighborhood Stabilization Program, which he says could be accessed by the community group ACORN. Bachus, ranking member on the House Financial Services Committee, said the group is “notorious” for its efforts to commit voter fraud and more funds available to the group would undermine the administration’s efforts for transparency and flexibility o the Treasury Department to strengthen the financial system.

“One of the best things we can do to stabilize the credit markets and promote long-term economic growth is to restore fiscal discipline and stop the reckless government spending,” he said. “As institutions begin to pay back their TARP assistance, we need to end the bailouts and return that money to the taxpayers thereby reducing the deficit.”

These arguments surely hold merit. But if they really want to promote economic growth and return money to the taxpayers, some of the $6.5 billion should be allocated towards helping the small business industry, which accounts for 85% of employment. Stimulating the economy should not come with pumping more money into contractors and local and state governments for building and redevelopment, but to the workers and consumers whose dollars they rely on. Up to this point, the TARP funds have been used for these corporate issues, and rightfully so. But some ground level redevelopment needs to be addressed. If even $2 billion were to be given to small business owners to help stimulate their practices, employees could be hired, consumer confidence could get a boost and the economy could be strengthened. An immediate impact could be generated. As the employment rate continues to rise, what good does it do to build more homes? If the foreclosures are rising, what good does it to add on to the supply?

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Comments»

1. brohes - July 10, 2009

“But if they really want to promote economic growth and return money to the taxpayers, some of the $6.5 billion should be allocated towards helping the small business industry, which accounts for 85% of employment.”

Well said.. that is where the first package should have been geared toward. I’m against any bailouts, but if they are going to do it, it could at least go to the right areas. Again, well said.

2. John Watch - July 10, 2009

Indeed. The corporations and the contractors rake all of the cash in, while consumers get laid off, foreclose their homes and struggle to make ends meet. The small business owners are the ones that need the support.

3. brohes - July 10, 2009

I have a friend in Georgia right now that owns a small 10 employee business that is preparing to sell about 75 acres of his land to keep from having to fire anyone and still stay afloat.

What I would like to see from all of this is the American people stand up and make it impossible for their voices to be heard. That is the only good thing that I could thing of coming from these bailouts.

I’m tired of Republicans too.. which I can’t identify with any more (for the most part). I really think that by 2012 if things continue we could possibly see a real third party movement.

I can dream can’t I? 🙂


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