n Up to $200 billion will be available to investors to back small and large purchases.
By JEANNINE AVERSA
The Associated Press
WASHINGTON – The government launched a much-awaited program Tuesday to spur lending for autos, education, credit cards and other consumer loans by providing up to $200 billion in financing to investors to buy up the debt.
If the program succeeds, it should help bust through the credit clogs in place since last year and make it easier for Americans to finance large and small purchases at lower rates, Federal Reserve Chairman Ben Bernanke told Congress. That, in turn, would help revive the economy, he said.
Created by the Fed and the Treasury Department, the program has the potential to generate up to $1 trillion of lending for businesses and households, the government said. It will be expanded to include commercial real estate, though that won’t be part of the initial rollout.
“There’s a looming crisis in commercial real estate whereby owners of shopping malls, hotels, rental properties and many other types of buildings are unable to refinance or to pay for new construction because the (commercial) securitization market is completely shut down,” Bernanke said during an appearance before the Senate Budget Committee.
The program will start off by providing $200 billion in loans to investors with the goal of jump-starting lending to consumers and small businesses. The program, dubbed the Term Asset-Backed Securities Loan Facility, was first announced late last year and originally was scheduled to start in February.
Participants – companies and investors that pledge eligible collateral to back the loan – must request the new government loans by March 17. The Fed will provide the three-year loans on March 25.
Under the program, the Fed will buy securities backed by different types of debt, including credit card, auto, student and small business loans.