Nexus: Chapman's Journal of Law and Public Policy

Although 115 banks have failed this year, the government decided against bailing out any more banks. Last years $700 billion taxpayer bailout of banks caused a political uproar. Instead Congress is encouraging banks to modify the terms of their loans. Congress is trying to extend the first-time homebuyers tax credit which was part of the economic stimulus program. It was set to expire this month, but the Senate approved the extension and the President is expected to as well. To qualify, buyers have to sign a purchase agreement by April 30, 2010 and close by June 30. The measure will continue to apply to first-time homebuyers who can receive up to $8,000. Buyers who have owned their current homes at least five years will also be eligible for up to $6,500. Congress’ reason for extending the tax credit? It’s working. 1.4 million first-time homebuyers qualified for credit through August 2009 and the National Association of Realtors estimates that 350,000 of them would not have purchased their homes without the credit.

Government-controlled mortgage company Fannie Mae announced that its new “Deed for Lease” program will give borrowers on the verge of foreclosure the option of renting their homes for a year. The program requires that homeowners who cannot pay their mortgages transfer title to Fannie Mae and sign a one year lease. It enables families to stay in their homes during times of uncertainty. It also helps lenders avoid the time-consuming foreclosure process.

With high unemployment rates nationwide, Congress is trying to approve an extension of jobless benefits which will apply in all states for 14 weeks and for up to 20 weeks in states where the unemployment rate is above 8.5%.

Is it enough? I think we have to achieve a balance between enacting government regulation and letting the economy run itself. These days the economy is more affected by consumer confidence so as long as the media says we are coming out of the recession, we are.

Sources used:

Kevin Hall, Small Banks, Lenders Suffering, The Press-Enterprise, November, 6, 2009, at D1. Alan Zibel, Borrowers Get an Option to Foreclosure, The Press-Enterprise, November, 6, 2009, at D3. Stephen Ohlemacher, New Life for Tax Credit, The Press-Enterprise, November, 6, 2009, at D3. Jobless Benefits Extended, The Press-Enterprise, November, 6, 2009, at A1.