Excerpt from: Bonds and Interest Rates CFDs and Spread Bets
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| November 25, 2008 | | U.S. Federal Reserve and Treasury makes billions available for consumer loans | The next incarnation of the TARP plan, used by the U.S. Federal Reserve and the Treasury to boost special lending in the hopes that it will help the economy and loosen credit, is to include consumer loans.
Indeed, the Fed in New York is planning to lend up to $200 billion in order to encourage investors to buy securities backed by consumer debt. These are securities that include such items as credit card debt, auto loans and student loans.
At the same time, the Federal Reserve central bank has announced that it will be buying up to $500 billion in mortgage back securities from embattled companies Freddie Mac and Fannie Mae. Ginnie Mae is also involved.
The hope is that by encouraging investment in debt, it will free up the credit market, creating an impetus for lenders to offer more financing -- especially to consumers. The drop in consumer spending fueled by debt is one of the things cited as causing continued economic troubles and credit market woes in the U.S.
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