FACTBOX: McCain plan to form trust to manage economy crisis

(Reuters) - Republican White House candidate Sen. John McCain on Friday outlined a plan to reform U.S. financial markets, including the formation of a Mortgage and Financial Institutions trust to manage the crisis.

Following are details about the MFI:

PURPOSE

* It would serve as an early intervention mechanism that would help financial institutions avoid bankruptcy and expensive bailouts while protecting their customers. It would minimize the use of taxpayer money by having an orderly process to address market crisis.

* The MFI would work with the private sector and regulators to help identify troubled institutions and take action to strengthen them before they became insolvent.

* The MFI would be a mechanism through which troubled institutions could identify bad loans, provide funding and eventually sell them at a profit.

STRUCTURE

* As part of the U.S. Treasury Department, it would be managed by a board of directors that would include the treasury secretary, Federal Reserve chairman, chairman of the Federal Deposit Insurance Corp and two public members.

HOW IT WOULD WORK

* Troubled institutions would voluntarily come to the MFI.

* The MFI would provide liquidity loans at reasonable interest rates and receive warrants for a controlling interest in those institutions.

* Troubled financial institutions that entered the MFI would keep operating as private companies with MFI help.

* The MFI would supervise the sale of loan assets at market prices and purchase them as necessary.

* It would eventually sell the loans to the private sector.

* It would have a predetermined tenure during which to dispose of the loans.

* All profits would be returned to the Treasury Department and taxpayers.

(Reporting by Deborah Charles, editing by Ross Colvin)