Federal Reserve announces new $800bn boost to strengthen US economy

Dandelion Salad

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.

via Federal Reserve announces new $800bn boost to strengthen US economy – Telegraph + video

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