President Obama: Inherited Economic Crisis

Talking Points: Obama’s Economy

obama_sc_04_01_2007731285When Barack Obama took the national stage as president on that bitterly cold day last January, he inherited an economic crisis of cataclysmic proportions. From day one, the chief executive sprang into action, pushing through a program to stabilize the financial sector and resurrect the American economy. Within six weeks of being in office, he effected a mammoth stimulus package that sought to help homeowners keep their homes, boost consumer confidence, thaw the credit markets, and put Americans back to work. As Obama begins his second year in office, he will continue his ambitious agenda. But will his initiatives be enough to silence the growing chorus of critics–some who argue that his $787 billion stimulus didn’t go far enough; others who say that proposals such as healthcare reform will contribute to huge deficits that will wreck the economy’s long-term prospects; and the cadre of unemployed and underemployed who are becoming increasingly impatient with this jobless recovery?

Jan. 20 Obama is sworn in as the 44th President of the United States. In his inauguration address, he tells Americans that “the state of our economy calls for action: bold and swift.”

Feb. 6 The president signs an executive order to establish the President’s Economic Recovery Advisory Board. Led by former Federal Reserve Chairman Paul Volcker, the panel is charged with giving advice about resurrecting the economy.

Feb. 10 Treasury Secretary Timothy Geithner reveals plan to stabilize financial sector. After inheriting the $700 billion Troubled Asset Relief Program, or TARP, from the Bush administration, Geithner says the Obama administration’s more comprehensive plan seeks to “help restart the flow of credit, clean up and strengthen our banks, and provide critical aid for homeowners and small businesses.”

Feb. 17 The president signs into law the $787 billion American Recovery and Reinvestment Act, commonly referred to as the stimulus package. The intent is to kick-start the economy by providing new jobs, extend unemployment and health benefits, and provide tax breaks for homeowners and financing for small businesses.

March 4 Obama announces the $275 billion Making Home Affordable Program. Part of an extensive plan to restore the housing sector and provide assistance to up to 9 million families through foreclosure relief. The program provides mortgage modifications and first-time homebuyer tax credits.

March 16 The administration launches a $15 billion plan to increase lending to small businesses. The U.S. Treasury Department injects funds into the small business loan market to enable lending institutions to free up capital for them to make additional loans to small firms. The government also temporarily increases the guarantee for SBA 7(a) and 504 community development loans.

March 30 The federal government takes control of General Motors and Chrysler to protect U.S. auto industry. The ouster of GM CEO Rick Wagoner and the proposed merger between Chrysler and Italy’s Fiat clears the way for the Obama administration to lend the automakers the funds they need to stay afloat and requires them to revise their restructuring plans.

April 30 After failed negotiations between the Treasury, creditors, and the United Auto Workers Union, the Obama administration forces Chrysler into Chapter 11 bankruptcy.

May 20 The president signs the Fraud Enforcement and Recovery Act saying it will “give prosecutors and regulators new tools to crack down on … the twin scourges of mortgage fraud and predatory lending.” And the Helping Families Save Their Homes Act, provides assistance to responsible homeowners to prevent foreclosures.

May 22 Obama signs Credit Card Accountability, Responsibility, and Disclosure Act. The administration maintains that this overhaul will protect consumers from egregious charges and over-the-limit fees.

June 1 The Obama administration refuses to give additional bailout funds to GM, forcing it into one of the largest commercial bankruptcy filings in history.

June 10 Chrysler ends its bankruptcy reorganization as the automaker merges with Fiat. The federal government, which owns a minority stake in the new company, provides Chrysler with $6.6 billion in exit financing.

June 17 Obama unveils massive plan for the reform of the nation’s financial regulatory system to avoid “systemic risks.” The administration proposes to give the Federal Reserve new powers to oversee the entire financial system as well as create a consumer protection agency to guard against credit abuse and other consumer abuse.

June 23 The president signs an executive order creating the White House Council on Automotive Communities and Workers.  The new task force will help autoworkers make the transition to new manufacturing jobs in emerging industries such as alternative energy.

July 10 GM emerges from bankruptcy,  forming a new company with U.S. Treasury owning 60.8% of the common stock.

Aug. 7 Obama signs an extension of the “Cash for Clunkers” program. The Car Allowance Rebate System, which started in June, pays consumers up to $4,500 in credit for trading in their autos for more fuel-efficient models. The Senate approves an additional $2 billion for the program.

Nov. 6 Obama signs the Worker, Homeownership, and Business Assistance Act of 2009 to promote job creation through an additional tax cut for businesses, extend unemployment benefits up to 20 additional weeks, and increase home sales with a one-time extension of the $8,000 homebuyer tax credit.

–Additional reporting by Alan Hughes & Christina Faison

This article originally appeared in the January 2010 issue of Black Enteprise magazine.