Washington’s financial bailout plan is now law. However, banks may be hesitant to resume lending, which would help the economy recover.
Experts say the most important thing before the $700 billion bailout even has a chance of working is home prices must stop falling. That would send a signal to banks the worst has passed and it’s safe to start lending more.
The problem is the lending freeze has made getting a mortgage loan tough for everyone except those with sterling credit. That means it will take several months or longer before home prices start appreciating.
Housing is a critical component to the U.S. economy and by extension the availability of credit. Roughly one in eight U.S. jobs depends on housing either directly or indirectly. A turnaround in housing prices would boost confidence in the wider economy and, experts hope, goad banks into lending again.
Brief by The Associated Press