The Obama administration may use a new Federal Reserve program designed to spur consumer lending to help remove distressed assets from the balance sheets of banks, Bloomberg reports, citing people familiar with the matter.

The report says officials may combine the Treasury plan to set up private investment funds to buy frozen assets with the Fed's Term Asset-Backed Securities Loan Facility, or TALF. The Federal Deposit Insurance Corp. also could get a wider role, the people said.

Treasury Secretary Timothy Geithner may use an array of approaches to maximize the likelihood of cleansing banks' balance sheets so they can start lending again. The next announcement may come as soon as this week, according to Bloomberg.

The TALF would provide loans to investors and agree to take illiquid debt as collateral, the people said, Bloomberg reports, and would be used alongside the Treasury's planned public-private investment funds.

As it is currently set up, Bloomberg reports, the TALF program may lend as much as $1 trillion to investors from hedge funds and pension funds to insurance companies to buy recently created securities backed by consumer loans. Applications for its first loans are due Thursday.

Broadening the TALF to include older, illiquid and lower- rated securities could allow the players in the public-private investment funds to potentially repackage assets and sell them on to a wider group, according to Bloomberg.

The Fed said Wednesday it could expand the TALF program to include other financial assets.