INSTANT VIEW: U.S. announces program to aid consumer lending

NEW YORK (Reuters) - The Federal Reserve on Tuesday announced a $600 billion program to buy mortgage-related debt and securities and a $200 billion facility to buy consumer debt securities, in another massive life-support intervention for the U.S. financial system.

KEY POINTS: * Fed says creates $200 billion facility to support asset-backed securities * Facility to support issuance of student, auto, credit card and small business administration-backed loans * Fed says to buy up to $500 billion in mortgage securities backed by Fannie Mae, Freddie Mac, Ginnie Mae * Fed says US Treasury to provide $20 billion to Fed for credit protection

COMMENTS:

MATTHEW STRAUSS, SENIOR CURRENCY STRATEGIST, RBC CAPITAL

MARKETS, TORONTO:

"We saw a positive reaction from the market to this further stimulus and backstopping of the ABS market. It's also moving closer to a direct stimulus package for consumers.

"In the long run, there are risks. A few years from now, if the economy is still struggling but with the added liabilities of these stimulus efforts, then that could weigh on the dollar. The U.S. government is taking on additional liabilities to stimulate growth. Then again, so are other countries. Staying on the sidelines and letting the economy slide would be much worse. This is the price that needs to be paid to help the economy through this difficult period."

KEVIN LOGAN, SENIOR U.S. ECONOMIST, DRESDNER KLEINWORT, NEW

YORK:

"The announcements were out earlier so we kind of had a sense of what is going on. The initiatives that the Treasury and the Fed are putting together right now are a good step. The market is not willing to accept as much risk as before, people are risk averse so they are not investing in the securities that back loans to potential home buyers or car buyers and that has forced up the yields on existing securities that are issued by the GSEs, and it has pretty much shut down the asset-backed securities market.

"By putting these initiatives in place, starting with the mortgage program, the Fed should be able to push down the yields on mortgage-backed securities and the agency debt and that will provide cheaper financing for the GSEs who in turn can make mortgage loans at lower rates. That should prop up the housing market and slow the decline in housing prices, which in turn might prevent some foreclosures and help the banking system.

This is another logical step in the progression of easing of credit conditions."

CHUCK BUTLER, PRESIDENT, EVERBANK WORLD MARKETS, ST. LOUIS,

MISSOURI:

"It's all fine and dandy for today and makes everybody feel good about the prospects of everything working out here in the U.S., but I don't see how it doesn't unfold negatively for the U.S. dollar. There are just too many dollars. The size of this just keeps growing. There's nothing to stop it at this point.

"They're going to commit more money to unfreeze the markets. I don't think (the size issue will weigh on the dollar) until the credit market problem looks like it's going to be resolved. To me, that's the focus of everyone right now. This morning we had negative growth in the third quarter and all these bad data just keeps mounting. As soon as the markets return their focus back to that, that's when the dollar starts getting hit again."