"Serious thought needs to be given to establishing a new creditfacility to encourage lenders to make new loans," he said. DeBoer,who first floated the idea a few weeks ago in Congressionaltestimony, said the idea is similar to how the FDIC's own insuranceprogram works, in which banks pay a fee for insurance for theirdeposits. Thus, consumers feel confident entrusting their savingsto the institution because of the FDIC insurance.

Under DeBoer's proposed plan, loan orginators would pay a feefor insurance on the loans they are issuing. "The idea is that thesecurities sold against these loans in secondary markets willbecome more attractive to investors" which in turn would inspiremore lenders to make loans.

An alternative to this concept would be an expansion of the PPIPprogram to include the purchase of new securities, he also said.Again, the end goal is the same: bolstering capacity in thesecondary market, which would increase loan activity.

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Erika Morphy

Erika Morphy has been writing about commercial real estate at GlobeSt.com for more than ten years, covering the capital markets, the Mid-Atlantic region and national topics. She's a nerd so favorite examples of the former include accounting standards, Basel III and what Congress is brewing.