The Public-Private Investment Program will purchase the troubled mortgages and securities that have been at the root of the credit crunch. The Treasury has committed $75bn to $100bn to the program and said the private sector would also contribute.
On Wall Street key share indexes soared by up to 7% on the news.
The widely followed Dow Jones index gained nearly 500 points or 6.8% to close at 7,775 points, while the wider S&P 500 index was up 7.1% or 54 points to reach 823. Technology shares on the Nasdaq index ended the day up 99 points or 6.8%, at 1,556.
"The actions that we are getting are very helpful in removing the sand from the gears of the financial system, said Douglas Morgan, CEO at Hoffman Meyer Associates in Seattle. The Hoffman Meyer Associates CEO went on to say "The good news is that we have one more critical element in our recovery," he said. "But we've still got a long way to go."
The Treasury said the plan would help the financial system recover.
US banks still hold many mortgage-related assets that they cannot value or sell.
Having so many of so-called toxic assets on their books has made them reluctant to lend, causing the financial system to freeze up, and pushing the economy further into recession.
Hoffman Meyer Associates is Seattle's leading merger and acquisition, business brokerage firm. As a mergers & acquisition firm, our principals have completed scores of transactions of privately and publicly held companies during the past 25 years.
Over the years, our firm has developed strong relationships with companies and individuals that are ancillary to the mergers & acquisition process including banks, mezzanine lenders, asset lenders, transaction attorneys, certified public accountants, and financial planners. We are also affiliate members of leading merger & acquisition, business valuation, accounting and brokerage associations.
