The Federal Reserve on Tuesday said that it will purchase up to $600 billion in mortgage-backed assets in another attempt to deal with the financial crisis. The Fed said it will purchase up to $100 billion in direct obligations from mortgage giants Fannie Mae and Freddie Mac as well as the Federal Home Loan Banks. It also will purchase another $500 billion in mortgage-backed securities, pools of mortgages that are grouped together and sold to investors. The $600 billion buyout on mortgages came as the Fed also unveiled a new program to help unfreeze the market that backs consumer debt such as credit cards, auto loans and student loans. The program on consumer debt will lend up to $200 billion to the holders of securities backed by various types of consumer loans. U.S. Treasury Secretary Henry Paulson has said recently that the government was working on the new program, which will be supported by $20 billion of credit protection provided by the $700 billion bailout fund. The Fed said that the $600 billion effort to support the mortgage market was being taken to reduce the cost of home mortgages and increase their availability. It said the purchases of the mortgages and mortgage-backed securities would take place over a number of months.
