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US unveils new $800 billion plan to loosen credit

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That's the plan, anyway.

"This is aimed at increasing the availability of affordable lending," said Secretary Paulson at a briefing for reporters.

This new Term Asset-Backed Securities Loan Facility, or TALF, will be supported by $20 billion of equity backing from the Treasury's $700 billion Troubled Asset Rescue Program, known familiarly in Washington as TARP.

He also announced a separate $600 billion effort to buy up mortgage-backed assets in an effort to get money flowing in mortgage markets again, at lower rates.

As much as $100 billion of this program will go for purchases of assets from mortgage giants Fannie Mae and Freddie Mac, and the Federal Home Loan Bank. The rest will be used to buy mortgage-backed securities, the now-infamous pools of mortgages – some of them shaky – that were bundled together and sold to investors.

The current financial situation is historic and unpredictable, said Paulson.

The Treasury chief added that he knows many people wish there were a single action the US government could take, or a single bill that Congress could pass, to fix the situation. But there isn't, he said.

"We're developing the programs we think will be the most effective," said Paulson.

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