Government announces new loan programs - KLTV.com - Tyler, Longview, Jacksonville |ETX News

Government announces new loan programs

The federal government has unveiled two new programs to provide $800 billion to try to thaw the freeze in the market for consumer debt from home mortgages to credit cards.

The announcements by the Federal Reserve and the Treasury Department represented the latest modifications to the largest government bailout in history.

Treasury Secretary Henry Paulson defended a variety of revisions made to the bailout program, saying that there was no one response adequate to counter with what he calls a once- or twice-in-a-century financial crisis.

The Federal Reserve said it will buy up to $100 billion in direct obligations from mortgage giants Fannie Mae and Freddie Mac as well as the Federal Home Loan Banks. The Fed also will buy $500 billion in mortgage-backed securities, pools of mortgages that are bundled together and sold to investors.

The program on consumer debt will lend up to $200 billion to the holders of securities backed by various types of consumer loans.

Information courtesy of the Associated Press (2008).

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