With the constant change in our industry, economy, and culture I have to say I spend plenty of time on the web.  Pretty much every aspect of my job involves some need associated with the good ol' WWW.  Much of my time is consumed by communicating via email, updating blogs (conradventi.com, blog.ventiscafe.com, and my family blog), and keeping up with friends, family, and business associates on social networks such as Facebook.  The new way of online communication, also known as Web 2.0, allows business or people like myself to communicate with clients in an interactive fashion.  Blogs are good examples of Web 2.0.

A good amount of my time is also consumed with research.  I spend time on lender and bank websites researching product guidelines as change is more prevalent than ever.  The constant flow of information on news websites also makes the WWW a primary resource for up to date stories.  Many recent headlines have been focused on the economy and Obama's new administration.  After the approval of Obama's new American Recovery and Reinvestment Act, I quickly turned to Google to help me find details of the new programs for home owners.

With the simple search of "American Recovery and Reinvestment Act" on Google I found several great resources.  A couple of the top links lead me to whitehouse.gov and recovery.gov.  I had stumbled upon whitehouse.gov in recent weeks and found it a fairly good resource for Obama's new plans that I may have missed on the Nightly News on any given day.  As I spend a little more time reading about the new programs it didn't take me long to thinking about the effectiveness of whitehouse.gov and some of the other new information websites for the recent programs.  I'm definitely not saying that I agree with everything that's being pushed by Obama's new administration, but I do think his web presence is absolutely amazing. 

I continued to think about Obama's web presence when I was updating my blog with a new website makinghomeaffordable.gov.  As I thought about Obama's new "social network", if you will, Facebook came to my mind.  I remembered seeing plenty of advertisements on Facebook looking for support of his campaign for who knows how long.  So I quickly tabbed Firefox over to Facebook and searched for Barack Obama.  I was amazed to see that he has nearly 6 million supporters on Facebook.

Education is a primary goal of my business plan.  I love having the opportunity to provide my friends, family, and clients with information regarding home ownership and more.  As we continue to work through this economic downturn as a country I will do my best to provide helpful resources here at conradventi.com.  Although I don't agree with all that's being proposed by the new adminstration, I will continue to turn to whitehouse.gov for a reference for anything new coming in the works.

If you have a moment take a look at whitehouse.gov, you're bound to have some questions about programs that have come up in recent weeks.

This morning Secretary Treasurer Henry Paulson announced a big step by the Federal Reserve to unfreeze credit for home buyers, consumers and small businesses, committing up to $800 billion.

Although the terms are still somewhat vague, some basic details were announced:  the Fed will purchase as much as $600 billion of debt that is issued or backed by government-chartered housing-finance companies.  A new $200 billion program will be implemented by the Fed to support consumer and small business loans.

These steps by the Fed are geared towards the consumers and small businesses as we've seen the credit markets tighten significantly in recent months.  The housing finance market today reacted positively early in the day with rates on a 30 year fixed at 5.5% (5.678% APR).  By the end of the day, the volatile rates inched up, but finished off at a 2 month low.

I can see and feel the government making pushes to restore consumer confidence with the recent intervention.  From the perspective as a loan officer I can see the short term benefits, such as the low rates available today.  However, we've seen pockets of opportunities with nearly every announcement by the Feds/Treasury.  I am anxious to see where this money will be spent and if it will have a lasting impact in the consumer and small business finance sector.

The Federal Reserve released the statement regarding the Citigroup intervention.  Notice the guidelines by which the Fed states they will preserve the strength of our banking system and promote recovery.  Joint Statement by Treasury, Federal Reserve, and the FIDC on Citigroup.

The U.S. government is committed to supporting financial market stability, which is a prerequisite to restoring vigorous economic growth. In support of this commitment, the U.S. government on Sunday entered into an agreement with Citigroup to provide a package of guarantees, liquidity access, and capital.

As part of the agreement, Treasury and the Federal Deposit Insurance Corporation will provide protection against the possibility of unusually large losses on an asset pool of approximately $306 billion of loans and securities backed by residential and commercial real estate and other such assets, which will remain on Citigroup's balance sheet. As a fee for this arrangement, Citigroup will issue preferred shares to the Treasury and FDIC. In addition and if necessary, the Federal Reserve stands ready to backstop residual risk in the asset pool through a non-recourse loan.

In addition, Treasury will invest $20 billion in Citigroup from the Troubled Asset Relief Program in exchange for preferred stock with an 8% dividend to the Treasury. Citigroup will comply with enhanced executive compensation restrictions and implement the FDIC's mortgage modification program.

With these transactions, the U.S. government is taking the actions necessary to strengthen the financial system and protect U.S. taxpayers and the U.S. economy.

We will continue to use all of our resources to preserve the strength of our banking institutions and promote the process of repair and recovery and to manage risks. The following principles guide our efforts:

• We will work to support a healthy resumption of credit flows to households and businesses.
• We will exercise prudent stewardship of taxpayer resources.
• We will carefully circumscribe the involvement of government in the financial sector.
• We will bolster the efforts of financial institutions to attract private capital.

Click here to view the Term Sheet

Happy Friday!

Today in a national news conference, president-elect Barack Obama said that he will push a stimulus package through "immediately after" taking office.  The call to action will be necessary if the Bush Administration doesn't approve a stimulus prior to exiting office.  This news conference took place after morning reports of jobless claims grew to 6.5% in October, the highest since 1994.  Obama said the reports are "an urgent reminder that we are facing the greatest economic challenge of our lifetime."

On October 20th I wrote about Ben Bernanke's call to congress for the need of another stimulus package (click here to read post).  With the Federal Reserve, the Bush Admimistration, and president-elect Obama's focus on the need for an additional stimulus package, it seems to be just a matter of time until we hear the confirmation.

Tuesday I posted information regarding the views of economic recovery/regulation for both candidates on "Regulation:  What's Next?".  With the election now over, the transition has started to take shape.  One of the first tasks President-Elect Obama will address is the state of our economy.

I strongly recommend this in-depth analysis by the New York Times of the historical recovery process.  Follow the link to President-Elect Obama's Economic To-Do List.

The roller coaster ride on Wall Street has drawn an amazing amount of attention in recent months.  Regardless of a win from John McCain or Barack Obama today, the issue of the regulation of Wall Street will be loudly spoken about in the coming weeks.  Each candidate has a completely different regulation plan than the exiting president.

The Economists' Voice offers a great summary of each party's history and what we can expect to hear from each candidate:

While the presidential candidates have been diverted by critical issues ranging from Barack Obama’s taste in lettuce to John McCain’s condo, it’s hard to deny that, once elected, serious questions involving economic regulation—everything from housing finance to alternative energy mandates—will be front and center. And here, at least, the divisions are clear: Obama would use a heavy hand to push the economy back on track, while McCain would do his best to put the free back in free markets. Or maybe not.

Ever since the New Deal, Democrats have largely accepted the label as the party of regulation—defenders of the weak from the vagaries of soulless capitalism. Republicans, for their part, position themselves as the nemeses of the social engineers and do-gooders who would sap the economy of vigor.
But once in office, reality bites. Thus, with more than a little encouragement from Detroit, Ike committed the GOP to the biggest public works project in history—the Interstate Highway System. Richard Nixon imposed price controls to contain inflation, while Ronald Reagan protected the swooning steel industry from foreign competitors and the first President Bush championed market intervention in the name of cleaner air and accommodations for the disabled. The second Bush hasn’t stood on principle either, lavishing seniors with heavily subsidized prescription drugs and supporting bailouts for both investment bankers and the giant private mortgage insurers.
Democrats, of course, have been no better at sticking to their script. Carter deregulated airlines and trucking, while Clinton deregulated telecommunications and nuclear enrichment as well as opening the door to cheap Mexican imports.
Thus, while Obama and McCain may both lull true believers with the bromides of an earlier generation, a subtler mix of ideology and interest group muscle is bound to drive the regulatory agenda once elected. Consider just a few of the big choices ahead.

Housing Finance
The idea that Wall Street prefers Republicans to Democrats (and vice versa) is badly dated—just ask Chuck Schumer, a member of the Senate’s finance and banking
committee who has collected $1.4 million in campaign contributions from the securities industry in the last five years. But more than money drives the parties toward similar policies on financial regulation. The financial industry has become so critical to keeping the economic machinery moving and the fallout from a financial crisis has become so difficult to predict, that no president would let principle stand in the way of preventing the failure of a major financial institution.

Yet, as the bumpy road to the latest housing legislation shows, ideological divisions still have consequence. Conservative senate Republicans, who viewed the $300 billion in loan guarantees given to Freddie Mac and Fannie Mae (the nominally private housing insurers) as another step toward the socialization of the mortgage market, staged a brief, embarrassing rebellion before bowing to White House pressure. If the housing market does not rebound next year, one can expect a far more interventionist fix from Obama than McCain. And more generally, where Republicans are inclined to view information disclosure as the key to financial market health, ongoing disruption of Wall Street could trigger Democratic regulation of everything from short selling to hedge fund behavior to asset securitization.

To view the complete article click here: regulation-after-bush

Source:

"Regulation after Bush"

Robert Hahn and Peter Passell
The Economists' Voice: Vol. 5 : Iss. 4, Article 5.  (2008)

http://www.bepress.com/ev/vol5/iss4/art5

http://www.bepress.com/cgi/viewcontent.cgi?context=ev&article=1389&date=&mt=MTIyNTgzNTUzNA==&access_ok_form=Continue

Last week one of my readers asked a few questions regarding my thoughts on the stimulus package and the economy in its state following my post "Possibilities Of Another Stimulus Package".  I enjoy the interaction and questions and thought it to be prudent to post the reply:

Reader:

Do you really think that another stimulus package would boost our economy? Did the first one have that much of an impact? Would measures to improve access to credit boost the economy, but leave us right back how we got here, giving loans and money to people who couldn't sustain payments? Just questions, I guess, no solutions, but I'm curious about your thoughts.

On October 4th I posted "Rollercoaster Ride" in reaction to the Dow's single largest point drop in history.  Unfortunately the ride is not over.  The Dow has reacted with significant gains and losses throughout the past couple of weeks.  One bright piece of information today is existing US home sales has increased 5.5% since 2007.

Please watch the following video for a simple game plan for the recovery of the financial crisis:

Today Federal Reserve Chairman Ben Bernanke share with Congress his concerns for the economy that continues to see a slow down.  Despite the recent movements by the Bush Administration and the global efforts of the world's central banks, the US Economy is still continuing retract.   The financial and credit markets continue to show daily uncertainty.

The Federal Reserve has left the door open for another rate cut during its meeting on October 28-29.  Bernanke believes stimulus provided by monetary policy along with stabilization of the housing and credit markets will help the economy set a strong foundation.

Bernanke proposed an additional stimulus package that could total anywhere from $150-300 Billion.

"If the Congress proceeds with a fiscal package, it should consider including measures to help improve access to credit by consumers, home buyers, businesses and other borrowers," Bernanke said. "Such actions might be particularly effective at promoting economic growth and job creation," he added.

Passage of an additional sitmulus package prior to election seems unlikely, however, the direction of the economy will deterimine how Congress will act.

I had an interesting conversation with one of my family members today regarding current state of available mortgages.  Dino Venti owner of Venti's Cafe in downtown Salem has been building his loyal clientel for nearly 13 years.  When you step into Venti's you feel a sense of community among the regulars – it definitely has that "Cheers" type of atmosphere.  Having the face to face contact with customers nearly every day for the past 13 years, Dino has established many friends and acquaintances in the Willamette Valley.

He mentioned to me this evening as I was picking up my Boulder Bowl and Teriyaki Chicken for dinner, that he had a client tell him today that there are no mortgages available for people who have a credit score less than 750.

We've all heard, seen, or read about the housing industry and the changes in lending from banks.  As I mentioned in my post titled "Yes, You Can Still Get A Loan!" there are plenty of loans originating in these harsh economic times.

Communication is a key element in every aspect of our lives.  The media's job is to communicate the message to the people.  How that message is interpreted by the people can vary on many levels.  In times when there is a massive amount of information flowing from every source of media imaginable, it is vital to understand where you stand in the midst of the changes.  The lack of financial education in our country has been prevalent for so long that we're now dealing with the consequences.   Education is the tool that must be utilized to understand the meaning of what we hear, see, and read.

If you have questions about how the changes in our banking, mortgage, and real estate industries affect you, please don't hesitate to ask!