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What’s New in the Treasury Department

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In his report of stability, the IMF said the U.S. housing market: “At the moment, no one knows when the market will bottom out of housing … It is necessary to stem the decline of U.S. housing market to stabilize the system as this will contribute to the recovery of households and financial institutions. ” Jaime Caruana, head of the IMF financial sector say about it: “The downside risks highlighted in the April report seem to materialize, leading to a vicious circle between the financial system and economy.” But not everything is negative in the U.S. mortgage market, and that since Congress approved the aid package for Fannie Mae (NYSE: FNM) and Freddie Mac (NYSE: FRE), while four major U.S.

financial institutions , are working on mechanisms to generate funding for the sector. In relation to the initiative adopted by the United States Congress to aid the mortgage companies Fannie Mae and Freddie, it provides emergency funding and state guarantees for U.S. $ 300,000 million for home loans, thus aiding 400,000 proprietary debt and at risk of losing your home. This proposal in conjunction with the initiative to generate funding for the mortgage industry, are two key elements through which the U.S. government seeks to recover the real estate sector. The secretary of the U.S.

Treasury, Henry Paulson, tried to show optimism about, announcing that the four largest banks are ready to give impetus to a market of asset-backed bonds, which could help significantly expand the mortgage financing. The Bank of America (NYSE: BAC), Citigroup (NYSE: C), JPMorgan Chase (NYSE: JPM) and Wells Fargo (NYSE: WFC) are working on the design of these emissions that seek the promotion of the sector. From the Treasury Department designed a series of recommendations for good practice for the issuance of bonds backed of this nature that prevents them producing unnecessary risks. Speaking of Paulson: “I think backed bonds have the potential to increase mortgage financing, improve placement standards and strengthen U.S. financial institutions by providing a new source of financing. ” Are these two measures for the recovery of the housing market? At first, it seems not. While they are useful measures that avoid a major crisis and encourage the mortgage industry, there are still serious risks to other sectors, such as the credit card that threaten to increase the magnitude of the problem and make the impulses try with these measures lose effectiveness. Certainly, all these initiatives to boost the U.S. economy and overcoming the crisis, are helpful, but you can not believe they are the ultimate solution to the problems and they are still many risks that have not been changed in new outbreaks of the crisis. Given this, the only thing left is to hope that the passage of time go by deactivating those risks.

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