US to spend $800 billion more in fixing credit crisis
Billions of dollars more spent fixing financial hole
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Tuesday, 25, Nov 2008 03:54
US authorities are to spend an additional $800 billion (£523 million) shoring up the nation's finances.
The Federal Reserve is to spend $500 million buying mortgage-backed securities from Fannie Mae, Freddie Mac, and Ginnie Mae.
Up to $100 billion will also be spent purchasing direct obligations linked to the state-backed firms, which guarantee mortgage lending in the US.
Furthermore $200 billion has been made available from the Fed so the Federal Reserve Bank of New York can lend to lenders offering loans to consumers and small business.
It is hoped the move will encourage lenders to start offering loans to small business and consumers - and ease the stateside main street credit crunch.
The scheme will see lenders with recently issued AAA-rate asset-backed securities offer the cash.
This cash is in addition to the highly controversial $800 billion bail-out plan that had the world on the edge of its seat as US lawmakers rejected and then accepted the deal.
Fannie Mae and Freddie Mac were rescued by the US government in September after losses racked up from subprime mortgages put them at risk of collapse.