The Obama Administration is directing $1.5 billion from the bank bailout to help prop up the housing market in the five states that have experienced at least a twenty percent drop in housing prices, according to a senior administration official. President Obama will outline the program Friday morning in Nevada alongside Senate Majority Leader Harry Reid (D-Nev.).
Treasury will grant the funding directly to Housing Finance Agencies in California, Florida, Nevada, Arizona and Michigan to provide loan guarantees and restructurings and programs that address housing prices and unemployment, said an administration official.
Treasury will have to approve the state HFA programs and "as long as they meet the test of having a good chance of success and address the housing crisis the Treasury Department will be open to it," said an administration official.
The official said the five states would share the money, with a greater proportion going to those with the deepest price declines and highest unemployment. Michigan recorded 14.6 percent unemployment in December. Nevada reached 13 percent.
The federal government has pledged more than a trillion dollars to purchase mortgage-backed securities, backstop loans and modify mortgages. The administration official admits this $1.5-billion investment "is not a big solution to all these problems."
The administration said this trip is for President Obama to address housing and state how the government will strike an appropriate level of taxpayer support in the housing market. Keeping with his new communication strategy of directly engaging Americans, the president will hold a town hall meeting Friday morning at Nevada's Green Valley High School and then travel to Las Vegas to address business leaders.
President Obama will also accompany yet another Democratic candidate in reelection trouble. This time, it's the Democrats' point man in the Senate. Majority Leader Reid is down in the polls to his potential Republican challengers.