FACTBOX: U.S. facing potential $8 trln financial rescue bill

Tue Nov 25, 2008 2:00pm EST
 
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(Reuters) - Two new Federal Reserve programs aimed at easing consumer credit and lowering mortgages costs have pushed the potential bill for U.S. financial rescue efforts to about $8.317 trillion, although far less has been committed so far and money extended might not be lost.

Following is a rundown of the total amount of known U.S. public funds that could be put at risk -- either spent, allocated or pledged -- in Fed liquidity, loan and purchase actions, Treasury Department financial rescue efforts, housing support legislation and actions by other federal agencies:

* Up to about $1.8 trillion in Fed purchases of top-rated U.S. dollar commercial paper under a facility launched in October. The Fed said it does not intend to buy anywhere near this amount, which represents what eligible issuers could sell -- up to $1 billion per issuer. As of November 19, the Fed's holdings in this facility were $270.88 billion.

* Up to about $1.9 trillion in new Federal Deposit Insurance Corp guarantees for banks, including $1.4 trillion in new senior unsecured debt issued by banks, and $500 billion in transaction deposit accounts typically used by businesses to pay employees and vendors.

* Up to $800 billion in Fed support for mortgage and consumer credit markets, including purchases of up to $600 billion in debt and mortgage-backed securities issued by government-sponsored enterprises. The Fed is also launching, with Treasury backing, a $200 billion loan facility to support consumer credit, such as student auto and credit card loans.

* Up to $600 billion in Fed purchases of U.S. dollar commercial paper and certificates of deposit under a Money Market Investor Funding Facility announced October 21.

* Up to $900 billion in Fed Term Auction Facility loans was offered to meet financial institutions' cash needs over the year-end period, including $600 billion in normal auction facilities and two $150 billion "forward" TAF auctions conducted this month. As of November 19, $415.3 billion in TAF credit was extended.

* Unlimited commitments to lend through discount window to banks and broker dealers. Credit extended under these facilities totaled $296.82 billion as of November 19.

* $700 billion for the Treasury to buy equity stakes in financial institutions. The Treasury allocated $250 billion of this amount to banks and thrifts and granted another $40 billion to insurer American International Group and $20 billion to Citigroup under special rescue programs. The ultimate cost of these programs is uncertain and the government could profit if the shares rise in value.

* The Treasury, the FDIC and the Fed have agreed to shoulder up to $249.3 billion in losses from a Citigroup portfolio of $306 billion in risky assets.

* Unlimited temporary Fed currency swap lines with the European Central Bank, and central banks in England, Japan and Switzerland. The Fed maintains $165 billion in swap lines with other central banks to address elevated pressures in U.S. dollar short-term funding markets.

* Up to $50 billion from the Great Depression-era Exchange Stabilization Fund to guarantee principal in money market mutual funds to provide the same confidence that consumers have in federally insured bank deposits.

* At least $26.57 billion in Treasury direct purchases of mortgage-backed securities since September. The Treasury has said it will continue to make purchases in the months ahead.

* $200 billion to backstop Fannie Mae and Freddie Mac. The Treasury will inject up to $100 billion into each institution by purchasing preferred stock to shore up their capital as needed.

* Up to $144 billion in additional MBS purchases by Fannie Mae and Freddie Mac since their portfolio limits were expanded when the government took them over in September.

* AIG will get up to $152.5 billion in support from Treasury equity purchases and loans from the Fed.  Continued...

 

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