Robert Gnaizda
General Counsel
510-926-4006 office

Preeti Vissa
Community Reinvestment
510-926-4022 office

Berkeley, CA – Today, in response to the strong opposition from Main St. and the heavy Congressional criticism of the $700 billion dollar bailout, Greenlining Institute has proposed to the Secretary of the Treasury and the federal banking regulators an alternative or supplement to any future bailout. The proposal entitled the “$200 Billion Dollar Sovereign Wealth Fund Investment in Homeownership” could be headed by the two most respected Americans knowledgeable about housing and investments, Sheila Bair the Chair of the FDIC (listed by Forbes magazine as the most powerful woman in the United States) and Warren Buffet, the world’s most respected investor.

Sovereign wealth funds have $3.5 trillion dollars in funds. Initially, up to $200 billion would be sought to provide 6% thirty year fixed rate mortgages for families at the median income or below. The government would guarantee at least seventy-five percent of the loan pool. This involves very little risk since the foreclosure rate for low/moderate income families who secured thirty year fixed rate mortgages with accurate appraisals and verified income, is under 1%. (Attached is the letter to Secretary Paulson and the federal banking regulators.)

This sovereign wealth investment pool could also be a competitive alternative to Fannie Mae and Freddie Mac. If properly supported by the regulators and Congress, it is likely that this fund will be oversubscribed since its rate of return could be fifty percent greater than the present ten year Treasury note rate of 3.7%. If successful, additional authority could be granted to allow sovereign wealth funds to invest up to $1 trillion dollars in partially government guaranteed mortgages to the seventy percent of Americans who live from paycheck-to-paycheck.

Greenlining has confirmed meetings on November 17th and 18th in D.C. with Federal Reserve Chairman Bernanke, FDIC Chair Bair and Comptroller Dugan to discuss the homeownership crisis and alternatives but hopes that this issue will be addressed immediately.