By MICHAEL BARRENSTEINFox News – August 21, 2019 – 2:06pmAs the nation prepares for a historic first full year of new home construction in the U.S., the Federal Reserve has taken a rare step to raise the stakes for the housing market by creating an emergency fund to help with tax increases.
The Fed is taking the unprecedented step of raising the maximum amount of emergency funds to $4,535,000 to help pay for the next year of building.
The fund, created to help banks and investors, is set to be activated Monday, as new home sales surge to their highest levels in decades and the economy slows.
“The Fed has been putting a lot of stock in the mortgage market, and I think it’s very fair to say that the housing sector is under tremendous stress right now,” said Chris Ritter, president of the Mortgage Bankers Association.
Ritter said the Fed should use the money to help the economy recover from the crisis that led to the collapse of the housing bubble.
“If we’re going to build the houses, the Fed ought to be helping the economy,” he said.
“We know from experience that it doesn’t work that way.
The only way to do that is to invest in the economy.”
The Fed’s emergency fund has already helped the U-verse market rebound from the Great Recession and now is set up to help companies like Apple, General Electric and Intel get ready for the end of the decade.
The bank also plans to use the emergency fund money to buy back Treasury bonds and the stock of small companies that have already benefited from the stock market rebound.
The move is the first step by the Fed to act to help small businesses during the current economic downturn, when many of them are struggling.
But it is the second time in a month that the Fed has increased the emergency reserve funds available to it.
The first increase in the fund was on July 6, a week before President Donald Trump took office.
Trump had already proposed a $5 trillion tax cut for the wealthy and corporations, which would have cut the federal deficit by $4 trillion.
But the tax proposal didn’t pass Congress and Trump had to settle for a $1.4 trillion cut in his $4tn spending bill.
That measure included a $50,000 deduction for tax payments made to foreign governments, an increase to the standard deduction and other small tax breaks.