| FHA Loan Programs |
Consumer ABS Lending Facility
Washington-- Today the Treasury and the Federal
Reserve are announcing a facility to finance the issuance
of non-mortgage asset-backed paper in order to support
lending to consumers and small businesses that is vital to
our economy.
The consumer asset backed securities market is a source
of liquidity to financial institutions that provide
federally-guaranteed small business loans and consumer
lending such as auto loans, student loans and credit
cards. Issuance of ABS in these areas reached $240 billion
in 2007, but credit market stresses led to a steep decline
in the third quarter of 2008, and the market essentially
came to a halt in October. As a result, millions of
Americans cannot find affordable financing for their basic
credit needs. And credit card rates are climbing, making it
more expensive for families to finance everyday
purchases. This lack of affordable consumer credit
undermines consumer spending and as a result weakens
our economy.
To address this need and support the return of consumer
lending, the Treasury will provide $20 billion of credit
protection to the Federal Reserve in connection with its
$200 billion Term Asset Backed Securities Loan Facility. By
providing liquidity to issuers of consumer asset backed
paper, the Federal Reserve facility will enable a broad
range of institutions to step up their lending, enabling
borrowers to have access to lower cost consumer finance
and small business loans. The facility may be expanded
over time and eligible asset classes may be expanded later
to include other assets, such as commercial
mortgage-backed securities, non-agency residential
mortgage-backed securities or other asset classes.
Throughout this financial market turmoil, our focus has
been to stabilize the system and support the lending that
is vital to our economy. Toward that end we've taken
steps to strengthen the capital position of our financial
institutions, to stabilize the system and to enable them to
increase lending to American consumers and businesses.
Similarly, we've acted to stabilize the GSEs and to
purchase GSE mortgage-backed securities, in order to
increase the availability of affordable mortgage credit
throughout our nation. Today's initiative to support the
small business and consumer finance market is similarly
aimed at increasing the availability of affordable lending.
Today's announcement by the Fed that it will purchase
direct debt obligations of Fannie Mae, Freddie Mac and the
Federal Home Loan Banks, and also mortgage backed
securities guaranteed by Fannie, Freddie and Ginnie Mae,
underscores our support for the housing market. Nothing
is more important to getting through this housing
correction than the availability of affordable mortgage
finance.
It will take time to work through the difficulties in our
markets and our economy, and new challenges will
continue to arise. I and my regulatory colleagues are
committed to using all the tools at our disposal to
preserve the strength of our financial institutions and
stabilize our financial markets, to minimize the spillover
into the rest of the economy.
Washington-- Today the Treasury and the Federal
Reserve are announcing a facility to finance the issuance
of non-mortgage asset-backed paper in order to support
lending to consumers and small businesses that is vital to
our economy.
The consumer asset backed securities market is a source
of liquidity to financial institutions that provide
federally-guaranteed small business loans and consumer
lending such as auto loans, student loans and credit
cards. Issuance of ABS in these areas reached $240 billion
in 2007, but credit market stresses led to a steep decline
in the third quarter of 2008, and the market essentially
came to a halt in October. As a result, millions of
Americans cannot find affordable financing for their basic
credit needs. And credit card rates are climbing, making it
more expensive for families to finance everyday
purchases. This lack of affordable consumer credit
undermines consumer spending and as a result weakens
our economy.
To address this need and support the return of consumer
lending, the Treasury will provide $20 billion of credit
protection to the Federal Reserve in connection with its
$200 billion Term Asset Backed Securities Loan Facility. By
providing liquidity to issuers of consumer asset backed
paper, the Federal Reserve facility will enable a broad
range of institutions to step up their lending, enabling
borrowers to have access to lower cost consumer finance
and small business loans. The facility may be expanded
over time and eligible asset classes may be expanded later
to include other assets, such as commercial
mortgage-backed securities, non-agency residential
mortgage-backed securities or other asset classes.
Throughout this financial market turmoil, our focus has
been to stabilize the system and support the lending that
is vital to our economy. Toward that end we've taken
steps to strengthen the capital position of our financial
institutions, to stabilize the system and to enable them to
increase lending to American consumers and businesses.
Similarly, we've acted to stabilize the GSEs and to
purchase GSE mortgage-backed securities, in order to
increase the availability of affordable mortgage credit
throughout our nation. Today's initiative to support the
small business and consumer finance market is similarly
aimed at increasing the availability of affordable lending.
Today's announcement by the Fed that it will purchase
direct debt obligations of Fannie Mae, Freddie Mac and the
Federal Home Loan Banks, and also mortgage backed
securities guaranteed by Fannie, Freddie and Ginnie Mae,
underscores our support for the housing market. Nothing
is more important to getting through this housing
correction than the availability of affordable mortgage
finance.
It will take time to work through the difficulties in our
markets and our economy, and new challenges will
continue to arise. I and my regulatory colleagues are
committed to using all the tools at our disposal to
preserve the strength of our financial institutions and
stabilize our financial markets, to minimize the spillover
into the rest of the economy.
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