Fed, Treasury Unveil Credit-Thawing Efforts

Updated from 1:57 a.m. EST

The Treasury Department and Federal Reserve are rolling out two new programs intended to unfreeze credit markets and spur new lending for homes, cars, higher education and credit cards.

In the first program, unveiled Tuesday, the Fed said it will purchase up to $100 billion in direct obligations from mortgage giants Fannie Mae (FNM Quote) and Freddie Mac (FRE Quote) as well as the Federal Home Loan Banks. It also will purchase another $500 billion in mortgage-backed securities, pools of mortgages that are bundled together and sold to investors.

A second program, a lending facility to be operated by the Federal Reserve, is intended to provide loans to investors who want to buy securities backed by credit cards, auto loans and student loans. Treasury will contribute between $20 billion to the facility from its $700 billion Troubled Asset Relief Program to back asset-backed securities that will support lenders. ...