Tuesday, November 25, 2008

Treasury, Federal Reserve to unveil plan to increase the availability of consumer loans, reports say.

LONDON (CNNMoney.com) -- The Treasury Department and Federal Reserve are due to unveil Tuesday a new program aimed at increasing the availability of consumer loans, such as car loans, credit cards and student loans, according to published reports.
Treasury will contribute between $25 billion to $100 billion to the program from its Troubled Asset Relief Program, the Wall Street Journal reported.
Treasury Secretary Paulson is due to announce details of the program at a scheduled briefing with reporters at 10 a.m. ET.
Earlier this month Paulson said the government would broaden the reach of its $700 billion bailout plan to support non-bank financial institutions that provide consumer credit such as credit cards and auto loans.
According to the New York Times, the facility to be announced Tuesday will also be broadened to include business debt.
The financial crisis has frozen lending markets, making it nearly impossible for consumers and businesses to borrow money.
Treasury originally had planned to use the $700 billion bailout to buy troubled mortgage assets. But it has shifted gears and focused mostly on injecting capital into banks.
Treasury agreed Sunday to make a $20 billion injection into financial giant Citigroup. (C, Fortune 500) That came on top of the $25 billion it invested in the company earlier this year.
The injection was part of a broader rescue package under which the U.S. federal government will guarantee losses on more than $300 billion of Citi's troubled assets.

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