Bailout could thaw consumer lending

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Scott Jagow: The government response to the financial crisis is moving at a pretty good clip now. Yesterday, we had the Citigroup bailout. Today, the focus will be on credit card companies. More from Steve Henn in Washington.

Steve Henn: This morning, Treasury Secretary Hank Paulson is expected to unveil his plans to use some of Treasury’s some of bailout money to thaw frozen consumer lending markets. Paulson signaled earlier this month the government would begin financing consumer debt, like car loans and credit cards.

Investors and banks used to do this, but the private market for consumer debt collapsed last month, pushing up rates on credit cards and making it harder to get car loans. By stepping into that void, the Treasury Department and the Fed hope to nudge consumer interest rates back down and get loans flowing again.

Treasury’s expected to invest $10 [billion] or $20 billion in the new program. The Federal Reserve stake will be much larger.

In Washington, I’m Steve Henn for Marketplace.