WASHINGTON — US officials on Tuesday opened a new front to fight the financial crisis with two new programmes aimed at boosting lending to consumers and small businesses and supporting the market for mortgage-backed securities. The US Treasury said that it would allocate $20bn to back a new lending facility for the consumer asset-backed securities market, an important source of liquidity for institutions that provide small business, auto and student loans and which has essentially shut down during the credit crunch. The Term Asset-Backed Securities Loan Facility will be operated by the Federal Reserve, which will extend up to $200bn in non-recourse loans to holders of ABS backed by loans that have been newly or recently originated. The $20bn contribution from the Treasury will come from its $700bn Troubled Asset Relief Program. In addition, the Fed said it would buy up to $100bn of debt from mortgage financiers Fannie Mae and Freddie Mac and the Federal Home Loan Banks through a series of competitive auctions starting next week. It will also buy up to $500bn mortgage-backed securities backed by those entities, hopefully by the end of the year. ‘This action is being taken to reduce […]