Emergency Economic Recovery Act

On Monday, September 29, 2008, the House rejected 205-228 a proposed financial rescue package (Cong. Mica and Cong. Feeney voted NO) so it went back for adjustments.

Two things happened the following week before the House then approved a revised financial package by a 263-171 vote (Cong. Mica and Cong. Feeney voted NO).

1. Stock and especially credit markets responded quickly and negatively to the first House vote, threatening a financial market meltdown.
2. The Senate then sweetened the package by increasing the FDIC insurance limit from $100,000 to $250,000 and including the popular tax "extenders" (AMT relief, deduction for state sales taxes, credits for alternative energy and R&D, and more).

On Wednesday, October 1, they approved the package by a 74-25 vote (Sen. Martinez voted YES; Sen. Nelson voted NO).

The rescue provisions of the final package authorize the Treasury Department to buy up to $700 billion in troubled financial assets in several stages, beginning with $250 billion immediately. Treasury will receive an equity stake in financial institutions which choose to participate. Those companies also face limits on the compensation of top executives. Programs to help homeowners avoid foreclosure would be strengthened and expanded. Congress, the GAO, a new inspector general, and a new oversight board will monitor all aspects of the program.

Many agree that the rescue package is far from perfect, but proponents said it should avert a much worse financial crisis.

Monday, October 13, 2008 - stocks are up more than 500 points today as Wall Street seeks to recover from last week's devastating losses. However, there is no doubt we're going to experience a credit crunch, and obtaining a loan or a line of credit is going to become more complex.

How are these developments going to affect your business plans for the future?