The Federal Reserve announced on Tuesday that it will initiate a program to purchase the direct obligations of housing-related government-sponsored enterprises (GSEs) — Fannie Mae, Freddie Mac, and the Federal Home Loan Banks — and mortgage-backed securities (MBS) backed by Fannie Mae, Freddie Mac, and Ginnie Mae. “This action is being taken to reduce the cost and increase the availability of credit for the purchase of houses, which in turn should support housing markets and foster improved conditions in financial markets,” the Fed said in a prepared statement.

The Federal Reserve Board also announced the creation of the Term Asset-Backed Securities Loan Facility (TALF). The Federal Reserve Bank of New York will lend up to $200 billion to holders of securities backed by consumer debt, such as credit card debt. The U.S. Treasury Dept., under the Troubled Assets Relief Program (TARP) of the Emergency Economic Stabilization Act of 2008, will provide $20 billion of credit protection in connection with the TALF.

More Info