Congress moved closer today to extending programs created to shore up tax-exempt credit markets as the housing bubble burst, the economy faltered and the financial system nearly collapsed.
The House agreed to continue temporary aid to help not-for-profit and government borrowers gain access to credit as part of contentious legislation that would cost hospitals $4.5 billion, as my colleague Matthew DoBias reported.
Hospitals have sought the proposals, which extend programs included in the 2009 economic stimulus act or the 2008 housing and economic recovery law.
One proposal would extend through 2011 laws that expand the market of tax-exempt bonds for which banks can take certain tax deductions. Another allows the Federal Home Loan Banks to continue guaranteeing not-for-profit hospital bonds, also through 2011.
A third program—credited for indirectly aiding not-for-profit healthcare borrowers—would also see an extension for two years. Build America Bonds allow state and local governments to borrow taxable debt, but with interest costs subsidized by the U.S. Treasury. Roughly $97 billion in Build America Bonds have been issued as of late April. That's $97 billion of (now taxable) debt—one fifth of the municipal market—that would have been competing for investors in the tax-exempt bond market, where private not-for-profit hospitals continue to borrow.