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Regulatory Change

Prudent Commercial Real Estate Loan Workouts

Date: 
October 30, 2009
Who: 
Fed
Policy Area: 
Financial Sector Policy
Economic Target: 
Financial Institutions
Action Type: 
Regulatory Change

This policy statement, adopted by each of the financial regulators, provides guidance for examiners and financial institutions that are working with commercial real estate (CRE) borrowers who are experiencing diminished operating cash flows, depreciated collateral values, or prolonged delays in selling or renting commercial properties.

This policy statement details risk-management practices for loan workouts that support prudent and pragmatic credit and business decisionmaking.

Notes: 

Associated costs, if any, are unknown.

Fed Payment of Interest on Bank Reserves

Date: 
October 6, 2008
Who: 
Fed
Policy Area: 
Financial Sector Policy
Economic Target: 
Depository Institutions
Action Type: 
Regulatory Change

Federal Reserve will pay interest on depository institutions' required and excess cash reserves.  Program originally slated to begin in October of 2011 was moved up to October 2008 because of the financial crisis.  Objective is to compensate depository institutions for lost income they could derive by investing reserve funds elsewhere.

Notes: 

Cost of paying interest is unknown. Activities of the Federal Reserve are not directly recorded in the federal budget.  However, each year the Federal Reserve remits a portion of its earnings to the general treasury.  This remittance is generally in the range of $20-$30 billion per year, but the CBO estimates that the Fed's earnings will be lower by approximately $90 billion over the next ten years.

Raise Limit on Insured Deposits: $100K to $250K

Date: 
October 3, 2008
Who: 
FDIC
Policy Area: 
Financial Sector Policy
Economic Target: 
Consumers
Economic Target: 
Depository Institutions
Action Type: 
Regulatory Change
Maximum Amount: 
$700.00 billion

The Emergency Economic Stabilization Act of 2008 temporarily raised from $100,000 to $250,000 the amount of deposit and share insurance in FDIC and Federal Credit Union member organizations. Initially, this law stated that the increased limit on insured deposits would last until 12/31/2009. However, On 5/20/2009 President Obama signed the Helping Families Save Their Homes Act, extending the temporary deposit insurance limit of $250,000 untill 12/31/2013. After that date, the FDIC deposit insurance limit will return to $100,000 except for IRAs and other retirement accounts.

Notes: 

Limit will return to $100,000 after Dec. 31, 2013. Maximum amount indicates total value of new insured deposits.

Streamlined Modification Program

Date: 
November 11, 2008
Who: 
FHFA
Policy Area: 
Sector Policy (Non-Financial)
Economic Target: 
Housing
Action Type: 
Regulatory Change

Creation of fast-track method for reducing monthly payments on mortgages held by Fannie Mae or Freddie Mac, restricting payments to 38 percent of income, reducing the interest rate, extending loan periods, and, deferring principal.

Notes: 

CBO's estimate from "Budget and Economic Outlook: Fiscal years 2009 to 2019" (http://www.cbo.gov/doc.cfm?index=9957) is listed as "unknown."  FHFA is the Federal Housing Finance Agency.

Enhanced Consumer Protection for Credit Cards

Date: 
December 18, 2008
Who: 
Fed
Who: 
NCUA
Who: 
Treasury
Policy Area: 
Financial Sector Policy
Economic Target: 
Consumers
Economic Target: 
Financial Institutions
Action Type: 
Regulatory Change

New credit card regulations adopted under the Federal Trade Commission Act, in coordination with similar sets of new rules adopted by the Office of Thrift Supervision and the National Credit Union Administration.

The new regulations, as described on the Federal Reserve's website:

Notes: 

Associated costs, if any, are unknown.

Home Affordable Refinance Program

Date: 
February 18, 2009
Who: 
Treasury
Policy Area: 
Sector Policy (Non-Financial)
Economic Target: 
Consumers
Economic Target: 
Housing
Action Type: 
Regulatory Change

Mortgage owners will be allowed to refinance with less home equity than what was permitted by previous regulations.  Program applies to loans owned or guaranteed by Fannie Mae and Freddie Mac and is one of two principle programs under the Treasury's Making Home Affordable program.

Notes: 

Budgetary impact of program is not known.  Maximum and current costs also unknown.

Change of "Market-to-Market" Financial Accounting Rules

Date: 
April 2, 2009
Who: 
Other
Policy Area: 
Financial Sector Policy
Economic Target: 
Financial Institutions
Action Type: 
Regulatory Change

On April 2, 2009, the Financial Accounting Standards Board announced that it would relax fair-value (i.e., "market-to-market") accounting rules that obligated banks to value all assets at the current market price.  New guidelines would give banks greater flexibility in how they value "distressed" assets.

Notes: 

Fiscal and budgetary impacts unknown.

SBA Actions Promoting Small Business Lending

Date: 
March 16, 2009
Who: 
SBA
Policy Area: 
Sector Policy (Non-Financial)
Economic Target: 
Other Business
Action Type: 
Regulatory Change

     Programs are part of a package of government actions by the Treasury Department and Small Business Administration (SBA) on March 16, 2009 to promote small business lending.     

These measures include:      

• Eliminating borrower and lender fees for SBA-backed 504 loans, which combines government-backed loans with private mortgage loans to support community development.

• Eliminating up-front fees for SBA 7(a) loans.  

Notes: 

Costs of provisions are unknown. 

Home Affordable Modification Program

Date: 
February 18, 2009
Policy Area: 
Sector Policy (Non-Financial)
Economic Target: 
Consumers
Economic Target: 
Housing
Action Type: 
Regulatory Change
Maximum Amount: 
$29.88 billion
Amount Spent: 
$3.59 billion
Deficit Impact: 
$3.59 billion

To stabilize the housing market, the Treasury announced on February 18 the Home Affordable Modification Program, part of the Making Home Affordable Program (MHA), to offer assistance to millions of homeowners by reducing mortgage payments. The program gives homeowners the opportunity to modify their mortgages as well as an opportunity to refinance GSE loans, which can lower monthly payments.

Notes: 

Maximum amount represents the total amount allocated to all mortgage servicers as of 8/22/2012, as reported on the Treasury's transaction reports. Amount spent is total spent on HAMP as of 8/22/2012.

Deficit impact is the same as amount spent.

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