Federal Reserve 800 billion dollar Consumer Loan and bond plan

The Federal Reserve announced on November 25, 2008 that it would create a (yet to be named) $800 billion dollar stimulus package related to buying up debt and mortgage backed securities.

This is different from the 700-billion dollar Troubled Asset Relief Program (TARP) that was originally passed by Congress for the similar purpose of buying up toxic debt and mortgages. On October 14, 2008, Secretary of the Treasury Henry Paulson and President Bush separately announced revisions in the TARP program. The Treasury will buy equity stakes in nine American Banks, and potentially thousands of smaller banks, using the first $250 billion dollars allotted to the program.

The Fed announced this new 800bn dollar program separate from TARP. While the programs are mainly aimed at consumer loans, they also provide financing to lubricate markets for bonds backed by federal Small Business Administration-guaranteed loans.

According to BBC, the breakdown of 800 billion is as follows:

• the Fed will buy up to $100bn in debt from Fannie Mae and Freddie Mac.
• the Fed will buy up to $500bn in mortgage-backed securities
• the Fed will loan up to $200bn to the holders of securities backed by various types of consumer loans, such as credit cards and student loans to help unfreeze the consumer debt market.

According to the Des Moines Register editorial, it is not clear whether bodies that oversee the TARP will oversee Paulson's control of the Fed's $800 billion loan and bond actions.