Washington, DC " September 26, 2008 " Maria Kong, President of the National Association of Real Estate Brokers (NAREB  today urged Congressional leadership, President Bush and Secretary of the Treasury Paulson, to act fairly and responsibly to ensure that minority-owned  real estate, finance and legal professionals are included among the firms tapped to manage the multi-billion dollar asset portfolio the government plans to purchase from failing Wall Street investment houses, and flailing financial institutions.
 
                Minority business participation in this $700 billion bailout is as crucial to rebuilding our nations economy and stemming further  community destabilization  as shoring up Wall Street.  We wholeheartedly support Congresswoman Maxine Waters, Chairwoman, Subcommittee on Housing and Community Opportunity and urge her colleagues, and the Administration to heed her consideration in this matter.  As compromises are made to gain full support for the legislation passage, there should be no compromise with regard to minority participation in the plans implementation, said Maria Kong, President of NAREB,  the nations oldest minority trade association founded in 1947 to ensure equal housing for African-Americans and other disenfranchised minorities.
 
                 Minority real estate and finance professionals are imminently  qualified and poised to be part of the economic recovery. Urban and minority communities have been devastated by the economic downturn.  And as importantly, minority professionals are part of these communities.   As Secretary Paulson and Congress extol that transparency is key to the plans success and restoring public confidence in the nations financial system, the transparency in implementation must show that the expediency of the moment does not negate the inclusion of  Americas minority professionals.  Our businesses and our communities deserve the same opportunity for an economic turn-about as  Wall Street does, Ms. Kong concluded.
 
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National Association of Real Estate Brokers

• Ensure that the benefits of this new entity do not accrue exclusively to investment bankers, insurance companies, and hedge funds, but that provisions are included that assist consumers seeking to restructure their loans.  Because these mortgage assests will be held by the government, and services act at the will of the owner of the asset, we must mandate - not merely encourage - real loss mitigation by all participants in the program. For instance, those who received high interest rate adjustments, should be readjusted to the lesser of the teaser rate or 3%;
• Mortgage assets that are sold to the government and repackaged for further sale should benefit the homeowner whose mortgages are part of the group of homes sold;
• The bill should authorize bankruptcy judges to be able to write down mortgage debt in bankruptcy as they can with other kinds of debt;
• Consideration must be given to the challenges faced by small financial institutions in competing in the open reverse auction context due solely to portfolio size, and not competence or qualifications to service or hold assets addressed by the program.  Consideration should also be given to the repurchase of preferred GSE stock form these institutions given their investment in such stock for mission-driven reasons and with encouragement from federal regulations.

II. Minority Participation at all Levels of Business

• Entity should include the equal opportunity language of H.R. 3221. At a minimum, that minority inclusion language should mirror language from the Omnibus Budget Act of 1993 which borrowed the original language from FIRREA. We should seek to make sure that the precedent set in 1989, and reaffirmed in 1993 and July 2008 is maintained.

III Enhanced Regulatory Oversight of Participants

• When an entity sells its assets to the federal government, the federal government must retain the right to examine the books of the entities, require certain lending standard be met, and require that uniformly apply lending in all communities;
• When an entity sells its assets to the federal government it becomes subject to capital standards to be established by the overseeing agency. These new capital standards would be set for investment banks, insurance companies, and hedge funds that participate in this new program.
  

IV. Transparency in Decision making

• The program should be controlled by a board that requires Congressional approval and is composed of private citizens representing the interest of housing and consumers as well as government officials;
• In the interim, before a board can be established a person could be nominated from Treasury to run the agency before the board is established. During this period their will need to be a quarterly report provided to the Congress by the agency and a quarterly report by GAO or CBO evaluating the performance of the agency.  Such transparency is a safeguard for taxpayer's investments.  This report should also feature key indicators of the process of contract allocation as well as prices paid to contractors;
• There should be special consideration in this legislation to the inherent conflicts of interest that exist.  For institutions which participate in the program we must consider the potential for "gaming" the system.  It would be unethical and a conflict of interest for such companies to directly profit from their mismanagement beyond the benefits that they would get in selling their tainted assets to the US.  For example, it would add government insult to taxpayer injury to allow an investment bank to sell a tainted asset to the government for 70 cents on the dollar and them buy that (or any similar) asset back later for 50 cents of the dollar.

Despite the urgency of this matter, we must be diligent in the protection of homeowners' rights, and consistent in our efforts to maintain and enhance oversight, transparency and minority participation in government agencies. If you have any questions, or would like to discuss the above concerns, please feel free to contact me at 202-225-2201