The U.S. Treasury Department says it intends to buy mortgage-backed securities from insurers as well as from banks.
The department has included insurers in the definition of “financial institutions” used in a $700 billion rescue plan bill submitted to Congress Saturday.
Under the definition, entities eligible to sell mortgage-backed securities to the government would include “any institution including, but not limited to, banks, thrifts, credit unions, broker-dealers, and insurance companies, having significant operations in the United States; and, upon the [Treasury] Secretary’s determination in consultation with the Chairman of the Board of Governors of the Federal Reserve, any other institution he determines necessary to promote financial market stability.”
At press time, the bill number and the text of the bill were not yet available.
The rescue plan bill would give Treasury the authority to buy up to $700 billion in mortgage-related debt from money market funds and a variety of other financial institutions, Treasury officials say.
Treasury officials submitted the bill in response to the collapse of 2 of the 5 largest U.S. investment banks, the rushed sale of a third giant investment bank to a commercial bank holding company, and news that the remaining 2 investment banks, Goldman Sachs Group Inc., New York, and J.P. Morgan Chase & Company, New York, have received approval from the Federal Reserve Board to adopt bank holding company charters on an emergency basis.
Officials are hoping that purchases of assets that are difficult to sell under current conditions will help thaw the frozen credit market markets.
The Treasury Department bill would raise the limit on the nation’s debt to $11.3 trillion, from $10.6 trillion, to enable the department to carry out the rescue.
Congressional leaders expect debate on the plan to take place this week.
We will add the rescue plan bill number and, if possible, a link to the bill text to this story as soon as that information is available.