U.S. plan targets credit support

The U.S. Treasury and the Federal Reserve will unveil as soon as today a lending program to shore up the consumer-finance market, using money from the government’s $700-billion bank rescue program, two people familiar with the effort said.

The Treasury and the Fed will help fund new loans packaged into securities for sale to investors, the people said. Treasury Secretary Henry M. Paulson, who scheduled a news conference for 10 a.m. EST, said two weeks ago he wanted to spur lending for automobile purchases and education while reducing the cost of credit-card debt.

Paulson and Fed Chairman Ben S. Bernanke are widening the scope of their rescue efforts after agreeing Sunday to guarantee most of Citigroup’s $306 billion in toxic assets. Paulson has spent most of the first half of the government’s Troubled Asset Relief Program aiding Wall Street banks, and pressure is growing in Congress to help average Americans.

“Paulson needs to be seen taking a leadership position,” said Axel Merk, president of Merk Investments in Palo Alto. “The markets are desperately looking for guidance on the way forward.”

Sen. Charles E. Schumer (D-N.Y.) urged the Treasury and the Fed on Sunday to use the $700-billion fund to make it easier for automakers’ finance units to lend.

“It is vital that this facility be established immediately and in sufficient size to allow consumers reasonable access to credit for auto purchases,” Schumer said in a letter to Bernanke, Paulson and Neel Kashkari, the official in charge of the bailout program.

Paulson previewed the new program in a Nov. 12 speech in which he said the Treasury and the Fed were “exploring the development of a potential liquidity facility for highly rated AAA asset-backed securities.” The government could use some of the bailout fund to encourage private investors to return to the market, he said.

“Addressing the needs of the securitization sector will help get lending going again, helping consumers and supporting the U.S. economy,” he said.