Reforming Our Financial Markets
The Mortgage And Financial Institutions Trust
September 19, 2008 — Today, In Wisconsin, John McCain Outlined His Plan To Reform Our Financial Markets. To ensure that people are able to stay in their homes and safeguard the life savings of Americans by protecting our financial system and capital markets, John McCain is calling for the formation of a Mortgage and Financial Institutions Trust (MFI).
The MFI will be a vital element in managing the current financial crisis.
The Purpose Of The Mortgage And Financial Institutions Trust (MFI):
The MFI Is An Early Intervention Mechanism That Will Help Financial Institutions Avoid Bankruptcy And Expensive Bailouts While Protecting Their Customers. The MFI will minimize the use of taxpayer money by having an orderly process to address the market crisis. Working with the private sector and regulators, the MFI will help identify troubled institutions and take action to strengthen them before they become insolvent.
The MFI Will Provide Troubled Institutions With An Orderly Process To Identify Bad Loans, Provide Funding And Eventually Sell Them At A Profit.This will get the Treasury and other financial regulators in a proactive position instead of reacting to one troubled institution after another.
The Structure Of The Mortgage And Financial Institutions Trust (MFI):
The MFI Will Be Part Of The U.S. Department Of The Treasury.The MFI will be managed by a board of directors consisting of at least the Secretary of the Treasury, Federal Reserve Chairman, Chairman of the FDIC and two public members. The Secretary of the Treasury will be Chairman of the Board. Under the MFI process:
Troubled institutions will voluntarily come to the MFI.
The MFI will provide liquidity loans at reasonable interest rates.The MFI will receive warrants for controlling interest in troubled institutions.
Troubled financial institutions that enter the MFI will keep operating as private companies with the help of the MFI.
The MFI will supervise the sale of loan assets at market prices and purchase them as necessary.
The MFI will eventually, and at its discretion, sell the loans to the private sector.
The MFI will have a predetermined tenure during which to dispose of the loans.
The MFI will return all profits to the U.S. Department of the Treasury and taxpayers.
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