Fed Moves to Free Up Credit for Consumers
The U.S. launched a program to finance up to $1 trillion in new lending to consumers and businesses, in an ambitious attempt to jump-start credit for everything from car loans to equipment leases.
The Federal Reserve and the Treasury Department hope to revive the moribund market for so-called securitized lending, which until last year was central to providing consumer and business loans. Starting March 17, large investors — including hedge funds and private-equity firms — can obtain cheap credit from the Fed and use the money to buy newly issued securities backed by such loans.
The Fed, which announced the program’s outlines in November in tandem with the Treasury, had already expanded the size of the program and on Tuesday further expanded its targets. Originally limited to backing securities for consumer and small-business loans, it now will also target securitized loans for heavy industrial equipment, agricultural-equipment leases and rental-car fleets.
[Article originally posted on WSJ.com] Continue reading