FED To Backstop Lenders

I guess we are now in the debt bundling business to the tune of $200 billion. Hopefully the FED does a better job calculating the risk of these things then the banks did.

Under the program, the Fed will buy securities backed by different types of debt including credit card, auto, student and small business loans. The credit crunch — the worst since the 1930s — has made it much more difficult for people to obtain such financing , and those that do can be socked with high rates.

Prior to the financial crisis, banks relied heavily on packaging loans into securities and selling them to fund additional lending. That process has financed about 25 percent of all auto, student and other consumer loans in recent years, the Treasury Department said Tuesday, until the credit markets ground to a halt in October