U.S. gov´t unveils $800 bln new programs to unfreeze credit markets

Source: Xinhua | 11-26-2008 08:17

WASHINGTON, Nov. 25 (Xinhua) -- The U.S. government Tuesday unveiled a pair of new programs that will provide 800 billion dollars to help unfreeze the credit markets.

U.S. Treasury Secretary Henry Paulson speaks at a news  conference at the Treasury Department in Washington,  November 25, 2008.(Xinhua/Reuters Photo)

Under the Term Asset-Backed Securities Loan Facility, or TALF, the Federal Reserve Bank of New York will lend up to 200 billion dollars on a non-recourse basis to holders of newly issued AAA-rated ABS for a term of at least one year.

The Treasury Department will provide a 20 billion dollars of credit protection to the Federal Reserve in connection with the facility, using its authorities in the Emergency Economic Stabilization Act of 2008.

Moreover, the Federal Reserve will buy up to 100 billion dollars 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 dollars in mortgage-backed securities, pools of mortgages that are bundled together and sold to investors.