FACTBOX: Fed opens $800 billion spigot for consumer loans

WASHINGTON (Reuters) - The U.S. Federal Reserve, with the backing of the Treasury, on Tuesday outlined an $800 billion lending facility to support the market for consumer debt securities.

The fresh money will chiefly be used to loosen up the housing finance market, but a share will aid the asset-backed securities market in a program called the Term Asset-backed Securities Loan Facility, or TALF. Following are details of the plan:

* Beginning next week, the Fed will buy up to $100 billion in debt from mortgage-finance enterprises Fannie Mae, Freddie Mac and the 12 Federal Home Loan Banks in a competitive bidding process through the central bank's primary dealers.

* The Fed will buy up to $500 billion in mortgage-backed securities issued by Fannie Mae, Freddie Mac and Ginnie Mae. The Fed hopes to begin those purchases, made through asset managers, before the end of the year. (While Fannie Mae and Freddie Mac were seized by the government in September, Ginnie Mae has always been in government hands).

* Federal Reserve Bank of New York will lend up to $200 billion on a non-recourse basis to holders of some triple-A-rated asset-backed securities (ABS) that hold fresh consumer and small business loans. The Treasury will pitch in $20 billion to help underwrite those investments.

* The Treasury funds will come from the remaining portion of the first tranche of its $700 billion financial rescue fund, known as the Troubled Asset Relief Program (TARP). The action leaves the Treasury just $20 billion in TARP funds before it must seek congressional approval to release a second $350 billion.

* ABS issuance of consumer loans -- such as for autos, education and credit cards -- were roughly $240 billion in 2007, but essentially ground to a halt in October, Treasury said.

* Income from the TALF assets will be used to first repay principal and interest to the New York Fed, and then to repay principal and interest on the $20 billion from the Treasury TARP fund. Any residual returns will be shared between the New York Fed and the Treasury.

* The New York Fed will apply a "haircut" to the value of the securities used as collateral for loans under the program.

* The New York Fed will offer a fixed amount of loans from the facility on a monthly basis. These loans will be awarded to borrowers each month based on a competitive, sealed bid auction process and the bank will set minimum interest rate spreads for bidding.

* The GSE debt and mortgage asset purchases are expected to take place over several quarters.