My financial market recap– so far — this week!

September 20, 2008

What a week this has been for the financial markets! I’ve been following the tumultuous events on Wall Street, and the actions of our Congress and the federal government. No doubt you have as well.

To recap what’s happened — so far — this week:

U.S. Dept. of the Treasury Secretary Paulson today announced that Congress and the administration intend to take poorly performing assets, primarily mortgage-backed securities, off the books of financial institutions.  These assets have been a prime impediment to the ability of financial institutions to lend money.

The government also prohibited the short sale of nearly 800 financial institutions for 10 days, and may extend this prohibition to 30 days.

The U.S. Dept. of the Treasury also plans to increase the amount of mortgage-backed securities bought from government sponsored enterprises (GSEs) Fannie Mae and Freddie Mac, in an effort to increase the GSEs’ role in the housing market.

The Federal Reserve and other major financial institutions worldwide also made hundreds of billions of dollars in loans available to commercial banks in an effort to improve liquidity.

My expectation is that Congress and the administration will work together to craft legislation as early as next week addressing these critical issues. I expect to have a good sense of what the legislation will contain by this weekend, prior to financial markets opening Monday morning. Stay tuned…this could be what our real estate market needs to improve.

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