“The hundreds of billions of dollars
that need to be re-written now have
an exit strategy.”

Jeffrey DeBoer
Real Estate Roundtable

3rd Annual

ity plan will restore confidence in the market. But if the reaction of the stock market, which plunged 400 points on the day of the announcement, is any indication, confidence may not be attainable at this point. Blumberg attributes the market’s pessimism to the skeletal description of the plan.

Critics of the scheme also say that while there are some measures to create greater accountability and transparency, it’s still not enough. To access federal funds, banks will now have to submit an outline of how the money will be used. New rules also prevent banks from using funds to snap up other banks. But Edward Mermelstein, managing partner at Edward A. Mermelstein & Associates, told GlobeSt.com, “The language is so murky that, at the end of the day, no one will know what is happening.”

As it stands, there are no guarantees that banks will begin lending again, but proponents of the plan say critics need to be patient, explaining that its nature is to promote lending. “This should begin to ease the credit markets,” says Jan S. Sternin, SVP of commercial and multifamily at Washington, DC-based Mortgage Bankers Association. “If you look at the specificity in the program, there is a reporting component for new lending, so there is an assumption that lending will take place.”

Meanwhile, the Emergency Economic Stabilization Act of 2008 launched the government’s stimulus efforts, which has since grown to address much more than financial failings and home foreclosures. While President Obama is pressing Congress to use the remaining bailout money to directly assist homeowners, he has crafted his own far-reaching and controversial $825-billion stimulus package, the American Recovery and Reinvestment Act of 2009.

Separate drafts of the bill have floated through both chambers of Congress, and a reconciled version has been whittled down to $787 billion at press time. For the most part, the bills mirrored each other, though the business tax breaks are a bit more generous in the Senate draft. Given the slim majority held by the Democrats in the chamber, the more business-friendly version is apparently a carrot to secure

Republican votes. Still, the GOP remains
unflinching in their disapproval of the
package—only three Republican senators
in all of Congress voted for the plan.
Democrats and Republicans alike have
found fault with the plan’s level of spending
and tax breaks, but the package does include
some provisions that may serve the commer-
cial real estate industry well. The bill includes
a temporary extension of net operating loss
carried back to five years versus the two years
allowed under the current law, as well as a
provision for 50% bonus depreciation.

Also included is a tax provision for companies that purchase their own debt at a discount. This provision would allow cancellation of debt income to be spread over four years. However, the US Chamber of

Hosted by Real Estate Forum and GlobeSt.com

April 30, 2009

JW Marriott Buckhead - Atlanta, GA

Hear From Industry Experts on
Where to Find Opportunities in
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Bringing together over 300 of the top owners, investors, developers, brokers and financiers in the Atlanta commercial real estate market, RealShare ATLANTA will once again provide you with the information and networking needed to survive and thrive in these tumultuous times.

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