According to CNN "The Treasury Department and Federal Reserve are due to unveil Tuesday a new program aimed at increasing the availability of consumer loans, such as car loans, credit cards and student loans, according to published reports."
The Wall Street says that the treasury will contribute between $25 billion to $100 billion to the program from its Troubled Asset Relief Program, the Wall Street Journal reported.
The measures are intended to restore normalcy in the economy and the financial industry. How they are going to do that? It seems that we may be at the outset of a world with new financial rules.
The New York Times reports:
At the Federal Reserve, meanwhile, policy makers are intensively preparing for the possibility a new era in monetary policy in which they must try to fight a recession after having already reduced the Fed’s benchmark interest rate to zero.
Last month, the central bank lowered its official target for the Fed funds rate to just 1 percent, its lowest level since 2004. But the Fed has already pumped so much money into the banking system — more than $1 trillion in the last year — that the actual overnight rate has slipped as low as one-quarter of a percent on several recent days.
On Friday, federal banking regulators announced two other measures aimed at shoring up confidence among banks and helping them attract more capital.
The Federal Deposit Insurance Corporation strengthened its emergency guarantee program on bank deposits, interbank loans and certain senior unsecured debt that banks issue.
The rules, initially announced on Oct. 15, were intended to eliminate much of the fear that had stopped banks from lending money to each other and had raised anxiety among businesses about keeping money in bank deposits. But the final rules adopted on Friday strengthen the federal guarantee and are expected to make it easier for banks to issue bonds.
In a separate move, the Office of the Comptroller of the Currency announced that it would allow private equity firms to apply for bank charters. That change is intended to make it easier for private equity firms to buy up failed banks that the government has taken over.
