All about business

The government launched a much-awaited program Tuesday to spur lending for autos, education, credit cards and other consumer loans by providing up to $200 billion in financing to investors to buy up the debt.

If the program succeeds, it should help bust through the credit clogs in place since last year and make it easier for Americans to finance large and small purchases at lower rates, Federal Reserve Chairman Ben Bernanke told Congress. That, in turn, would help revive the economy, he said.

Created by the Fed and the Treasury Department, the program has the potential to generate up to $1 trillion of lending for businesses and households, the government said. It will be expanded to include commercial real estate, though that won’t be part of the initial rollout.

The program will start off by providing $200 billion in loans to investors with the goal of jump-starting lending to consumers and small businesses.

The program, dubbed the Term Asset-Backed Securities Loan Facility, was first announced late last year and originally was scheduled to start in February.

Participants — companies and investors that pledge eligible collateral to back the loan — must request the new government loans by March 17 car loan interest rates. The Fed will provide the three-year loans on March 25.

"We should see immediate benefits to students, to credit cards, to small businesses, to consumer loans," Bernanke said.

Under the program, the Fed will buy securities backed by different types of debt, including credit card, auto, student and small-business loans. The credit crunch has made it much harder for people to obtain such financing, and those who do can be socked with high rates.

Before the financial crisis, banks relied on packaging such loans into securities and selling them to pay for additional lending. That process had financed about 25 percent of consumer loans in recent years until the credit markets ground to a halt in October.

The Fed plans to keep the program running through December but said it could be extended.

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