22 Mar 2009

US Treasury has three-part plan for toxic assets

7:31 am on 22 March 2009

The US government is expected to unveil a plan this week to try to get rid of toxic assets weighing down the country's financial system.

The plan will include setting up an entity that the Federal Deposit Insurance Corp will use to offer low-interest rate loans to private interests for buying up banks' soured assets, a source familiar with the plan told Reuters.

Treasury will also hire outside investment managers to run public-private partnerships that could invest for potential profit in troubled mortgages, with government capital matching private capital contributions, according to the source.

The Federal Reserve will expand its Term Asset-Backed Securities Loan Facility, to also buy older, so-called "legacy" securities.