No hedge funds, foreign banks in Treasury debt plan

WASHINGTON (Reuters) - Hedge funds and non-U.S. financial institutions will not be allowed to offload mortgage-backed securities and other troubled assets onto a proposed U.S. Treasury debt rescue facility, a Treasury official said on Friday.

The facility, expected to be funded with hundreds of billions of U.S. taxpayer dollars, will be available only to U.S.-based financial institution, the official said on condition of anonymity.

The Treasury and Federal Reserve are working with Congress over the weekend to hammer out details of the plan, which is aimed at clearing bank balance sheets of toxic and illiquid securities that are choking the U.S. financial system.

(Reporting by David Lawder)