TARP Reform And Accountability Act Of 2009

Floor Speech

Mr. MURPHY of Connecticut. Mr. Chair, I would like to draw attention to section 403 of H.R. 384, the ``TARP Reform and Accountability Act.'' It is clearer every day that there is a crisis in the commercial real estate credit markets. Section 403 of H.R. 384 clarifies Treasury's authority to take action to support liquidity in the commercial real estate market.

Right now the $3.4 trillion commercial mortgage market is frozen. Most lenders have withdrawn from the market and there is no secondary market for commercial mortgages. In 2007, the market provided approximately $240 billion in financing, which represented nearly 50 percent of all commercial lending. In contrast, the market came to a screeching halt and provided less than $13 billion in issuance in 2008, despite borrowers' demand. In 2009, tens of billions of commercial real estate loans will come due without any capacity to refinance these performing loans. The result could very well be widespread loan defaults. With the downturn in the U.S. economy now having dramatic effects on the commercial real estate market, Section 403 affirms the Treasury Department's ability to take action to help preserve this important sector of our economy.

With the clarification included in Section 403, the Treasury can move forward in determining how best to address this situation--either through the Term Asset-backed Securities Lending Facility; or by setting aside TARP funds for the creation of a commercial lending facility that would provide the private market with liquidity and allow for the extension of new credit, as well as assist in refinancing existing performing loans.

It is important that we continue to act to address this crisis in a responsible manner that protects the American taxpayer and preserves vital sectors of the United States economy and I urge my colleagues to do so through their support of H.R. 384.

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