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Fed finally announces bailout to help Main Street

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We've been watching as banks continue to hoard the bailout funds, maybe buy up some other banks, but nothing has trickled down to Main Street. Well, the Federal Reserve announced today that it's committing up to $800 billion to make it easier for Main Street folks to borrow money for cars, tuition bills and new homes. The Treasury Department is giving up very little of its Congressional bailout funds -- just $20 billion -- to the Fed's consumer lending program.

Did Congress really intend for so little to go to Main Street? I doubt it and I hope that when Henry Paulson comes begging for the second half of the bailout he's told it's not his to spend. Congress might want to wait for the new administration because many are not happy with how Paulson is spending it.

I'm glad to see the Fed is moving in a much more appropriate direction to help get Main Street back on track. The Fed intends to provide up to $200 billion to investors who plan to put the money towards consumer loans, such as credit cards, auto loans and student loans, as well as some forms of small business loans. These will be in the form of one-year loans available only for newly-issued consumer debt. These type of loans totally dried up in October and are essential to get the economy moving again.


In addition to consumer spending, the Fed announced it would buy up to $100 billion in mortgages held by Fannie, Freddie and the Federal Home Loan Bank to increase the cash available for the housing markets in the hopes to lower mortgage interest rates and encourage folks back into the housing market. The Fed may also buy another $500 billion in bundles of mortgage backed securities issued by the same agencies. The program will be announced later this morning by the Fed and the Treasury Department.

Lita Epstein has written more than 25 books including "The Complete Idiot's Guide to Improving Your Credit Score" and "The 250 Questions You Should Ask About Buying Foreclosures."

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Last updated: November 25, 2009: 04:55 AM

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