The Broader Market

Partially excerpted from Bond Buyer:

by Jennifer DePaul

The liberal think tank the Center for American Progress has proposed a plan to promote a new source of financing for troubled state housing finance agencies — the House America Bond.

A HAB would be a taxable, direct-pay bond, modeled after the Build America Bond program, which was created as part of the American Recovery and Reinvestment Act of 2009….

Jordan Eizenga, a member of the economic policy team at CAP and the author of the proposal, said issuers would not need a 35% subsidy rate, as that rate may have been too generous.

For more, see here.

by Jordan Eizenga

State housing finance agencies play an important role in the provision of affordable housing. As state-chartered institutions, these agencies emerged in the 1960s in response to the failure of private lenders and developers to finance affordable low- and moderate-income housing. With a detailed understanding of the needs of local housing markets, housing finance agencies are uniquely positioned to responsibly underwrite mortgages—often with down payment assistance—for low-income, first-time homebuyers and to finance the development of multifamily affordable rental housing.

Since their creation housing finance agencies have financed the construction of nearly 1 million affordable rental units and approximately 4 million affordable mortgages for low- and moderate-income households. Yet over the past several years, many of them have struggled to raise funds from their traditional source of capital—the tax-exempt bond market—at affordable rates and long maturities to finance their mortgage programs. This has made it more difficult for them to provide affordable mortgages for low- and moderate-income households where the lack of mortgage credit is greatest.

As this issue brief demonstrates, these funding challenges must be resolved if housing finance agencies are to continue to play an effective and central role in supporting their state and local housing markets. In particular, this brief argues for a promising new source of financing for housing finance agencies—what the Center for American Progress would like to call the “House America bond,” modeled after the successful Build America Bond program that was part of the American Recovery and Reinvestment Act of 2009.

For more, see here.

by Jordan Eizenga and James Hairston

Manufacturing remains an integral part of our economy. Manufacturing companies provide well-paying, middle-income jobs. U.S. manufacturing wages are, on average, 19.3 percent higher than the private-sector average even though the sector employs an above-average share of those without a college education. Manufacturing also drives innovation. Manufacturing companies account for more than half of all public and private research and development in the United States, the benefits of which spill over into other sectors.

While U.S. manufacturing today suffers from lower employment levels and slower growth in output than in the past, the sector is by no means a lost cause. Much can be done to bolster its competitiveness. For one, the federal government can help create jobs and increase output by improving the performance of manufacturers by increasing their access to capital.

For more see

here.

by Jordan Eizenga

The federal government has not yet implemented a program, authorized in legislation passed in September 2010, which, once up and running, will help so-called Community Development Financial Institutions invest in small businesses and communities hardest hit by the financial crisis.

by Jordan Eizenga and James Hairston

Starting November 1, Starbucks Corp. will begin collecting donations to provide capital for Community Development Financial Institutions as part of its “Create Jobs for USA” initiative. While Starbucks should be lauded for its efforts, Congress has already authorized a program that aims to expand the capacity of Community Development Financial Institutions to invest and create jobs in communities struggling to recover from the financial crisis.

(Click on the title for the rest of the article)