25 Nov 2008
The money will be used to buy mortgage- and asset-backed securities to try to get banks lending to consumers again, in the form of car and student loans, mortgages and credit cards.
The vast sum is in addition to the $700billion bank bailout announced last month.
US Treasury Secretary Henry Paulson said: “Millions of Americans cannot find affordable financing for their basic credit needs.”
He added that the boost could grow “over time” to cover other types of assets.
The loan system for this type of debt in the US came to a near-standstill in October.
The Fed will lend up to $200 billion to holders of AAA-rated asset-backed securities for a term of at least one year, with holders of the securities expected to accept “a haircut” reflecting the reduced market value.
FAIR USE NOTICE: This blog may contain copyrighted material. Such material is made available for educational purposes, to advance understanding of human rights, democracy, scientific, moral, ethical, and social justice issues, etc. This constitutes a ‘fair use’ of any such copyrighted material as provided for in Title 17 U.S.C. section 107 of the US Copyright Law. In accordance with Title 17 U.S.C. Section 107, the material on this site is distributed without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes. If you wish to use copyrighted material from this site for purposes of your own that go beyond ‘fair use’, you must obtain permission from the copyright owner.