The Emergency Economic Stabilization Act of 2008 was signed into law Oct. 3, just hours after the House of Representatives passed the bill.

The legislation represents the largest federal intervention in the financial markets since the Great Depression by providing for a $700 billion bailout of the financial sector.

That $700 billion will be used to buy troubled assets from financial institutions, freeing them up to make more loans. The government intends to resell those mortgage-related assets back into the market once stability returns to the economy.

The hope was that the bill would bring an immediate sense of calm to the financial markets. But on Monday, Oct. 6, the Dow Jones Industrial Average tumbled more than 800 points, falling below 10,000 for the first time in four years, amid growing signs that the bailout would proceed slowly and that the crisis had spread to many European and Asian economies.

Indeed, the Treasury Department’s massive undertaking won’t immediately jump-start the stalled debt markets for commercial real estate, many industry watchers agreed. “We hope this will unfreeze the lending pipeline within a reasonable time frame, but it isn’t going to happen overnight,” said Doug Bibby, president of the National Multi Housing Council (NMHC).

The question is, how long will it take for the Fed to execute its massive bailout plan? The Treasury Department is assembling a team of asset managers to execute the bailout, led by Ed Forst, former CEO of Goldman Sachs. But the work of reviewing each troubled asset and executing the transactions will not be a rapid-fire process.

“It’s going to take weeks and months before any real significant changes occur,” said David Ledford, vice president of housing finance for the National Association of Home Builders (NAHB). “[They] have to systematically review these portfolios, so even if things went as fast as they possibly could, it’s going to take some time just for the logistical process to occur.”

Complicating this effort is the fact that the bailout is a voluntary process. Each ongoing financial institution has a fiduciary responsibility to get the best value they can for these assets, to act in the best interests of its investors, which may lead to protracted negotiations. “There are a lot of question marks,” said Ledford.

The market for construction lending in particular will probably take awhile to come back. Smaller and regional banks, whose balance sheets are bloated with troubled construction loans, especially for single-family assets, probably won’t jump back into the construction lending market any time soon.

“That’s not an asset that would be easy to sell into the Treasury program, and these aren’t the kind of assets generally put into securities either, they’re very difficult to package,” said Ledford. “Liquidity will improve but the question is, will the appetite for these kinds of loans improve?”

The liquidity freeze of the past month is having a chilling effect on multifamily developers. The NMHC was receiving daily reports of its members laying off entire development teams in the last month, and NAHB said that many of its members were delaying viable deals, unable to procure financing.