Multifamily Benefits in TARP's Latest Twist

WASHINGTON, DC-Last we heard from Secretary Henry Paulson, the $700-billion financial system rescue plan would refocus on freeing up consumer and small business credit. Specifically, he said, the Troubled Asset Relief Program would not be used to buy up toxic mortgage-backed debt from companies that had invested in these securities.

That particular development was a blow to the commercial real estate industry, which had been counting on the federal government to move these securities off of investment banks’ balance sheets so they would begin lending again. The new focus on consumer lending, it seemed, would come at the expense of the commercial real estate industry.

That was then, though. Yesterday, Paulson revealed new plans for the remaining funds that had been made available to Treasury to bolster the economy. And true to his words earlier this month, it is focused on consumer lending, with the launch of a $200-billion facility to support student, auto, and credit card loans and loans backed by the federal Small Business Administration. However one CRE subsector–multifamily–also received a new financial boost from Treasury and the Federal Reserve Bank. The Federal Reserve Bank plans to buy, up to, $100 billion of debt issued by Fannie Mae, Freddie Mac and the Federal Home Loan Banks. It will also buy, up to,$500 billion of mortgage securities backed by Fannie Mae, Freddie Mac, and Ginnie Mae.