Emergency Economic Stabilization Act signed into law.(IN SESSION)

IN EARLY OCTOBER 2008, Congress acted quickly to pass legislation in an effort to repair the U.S. economy. The Senate amended the "Emergency Economic Stabilization Act of 2008" bill and passed it by a vote of 74 to 25 on October 1, 2008. Two days later the House voted 223 to 205 to approve of the Senate's changes. Hours later, the President signed the Emergency Economic Stabilization Act of 2008 into law. Provisions of the 451-page law that are of particular interest to IREM Members are highlighted below.

HIGHLIGHTS OF TAX PROVISIONS:

Extends the Energy Efficient Commercial Buildings Deduction for five years, through December 31, 2013. Current law allows taxpayers to deduct the cost of energy-efficient property installed in commercial buildings. The amount deductible is up to $1.80 per square foot of building floor area for buildings achieving a 50 percent energy savings target. The energy savings must be accomplished through energy and power cost reductions for the building's heating, cooling, ventilation, hot water, and interior lighting systems.

Provides AMT relief. The Alternative Minimum Tax (AMT) was created in 1969 to prevent a small number of wealthy Americans from evading taxes. The AMT has come to affect more people every year because it is not indexed for inflation. This law prevents 26 million Americans from paying more taxes this year.

Natural disaster tax relief. Provides temporary tax relief for areas damaged by severe storms, tornados and flooding in the Midwest during 2008. Also, temporary tax-exempt bond financing and low-income housing tax relief for areas damaged by Hurricane Ike.

Extends leasehold improvements. Extends the 15-year straight-line cost recovery for qualified leasehold improvements and qualified restaurant improvements through January 1, 2010 for property placed in service after December 31, 2007. Extends the 15-year recovery period for depreciation of certain improvements to retail space through January 1, 2010 for property placed in service after December 31, 2008.

HIGHLIGHTS OF THE TROUBLED ASSET RELIEF PROGRAM:

Purchases of troubled assets. The U.S. Treasury is authorized to establish a Troubled Asset Relief Program (TARP) to purchase troubled assets from financial institutions. The law includes provisions to prevent unjust enrichment by participants in the program. A financial stability oversight board will be established to ensure the policies are in accordance with the economic interests of the United States.

Mitigation of foreclosures. For mortgages and mortgage-backed securities acquired through TARP, the Treasury Secretary must plan to mitigate foreclosures and to encourage servicers of mortgages to modify loans. The Secretary will be allowed to use loan guarantees and credit enhancements to avoid foreclosures.

Limits executive compensation. The Treasury Secretary will write executive compensation rules governing financial institutions that sell the government troubled assets. For assets the Treasury buys directly, the financial institution must observe standards limiting incentives and prohibit golden parachutes.

Authorization to purchase troubled assets. Authorizes the full $700 billion requested by the Treasury Secretary for implementation of TARP. The Secretary is allowed to use $250 billion of those funds immediately under this law. Upon a Presidential certification of need, the Secretary may access an additional S100 billion. The final $350 billion may be accessed if the President transmits a written report to Congress requesting such authority.

Raises the statutory limit on public debit from $10 trillion to $11.3 trillion. As of October 3, 2008 the public debt was $10.128 trillion.

Strengthens the Hope for Homeowners program.

Increases eligibility and improves the tools available to prevent foreclosures.

Raises the FDIC and the National Credit Union Share Insurance Fund deposit insurance limits from $100,000 per account to $250,000 until December 31, 2009.

Temporarily raises the borrowing limits at the Treasury for the FDIC and the National Credit Union Share Insurance Fund.

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