The newest bailout will include a $600bn scheme to buy mortgage-backed assets and also a $200bn facility to back consumer loans, including student debts, car loans, and credit card debts.
This comes after Chancellor Alistair Darling outlined a £20bn fiscal stimulus to aid the UK economy, and the Chinese government revealed a 4 trillion Yuan (£388bn) package for its own economy. French President Nicolas Sarkozy has also promised a “quite massive” fiscal package by December.
The latest US plan means $1.3 trillion has now been pumped into the ailing US economy, and hopes to block the illiquid credit markets.
The US Fed says: “This action is being taken to reduce the cost and increase the availability of credit for the purchase of houses, which in turn should support housing markets and foster improved financial conditions more generally.”