The Treasury says from $250 billion to $500 billion of assets could be purchased this way, with the program eventually expanded up to $1 trillion. A special entity or series of special entities will likely be set up to facilitate the purchases.
—Second, the Federal Reserve will increase the size of the TALF to $500 billion to $1 trillion. It could not be determined if that figure included the existing $200 billion already committed.
As CNBC has already reported, the program will be expanded to include newly issued commercial and private-label mortgage-backed securities. It currently is geared up to finance only consumer student, auto and credit card loans.
—Third, the Treasury will propose using $50 billion for foreclosure mitigation. A more detailed speech on the foreclosure plan is expected next week.
—Fourth, additional captial injections will be made into banks after a systemic review that projects future losses and determine the minimal level of capital based on projected future writedowns.
The idea of involving private capital in the purchase of bad assets has gained speed in recent days. In that way, the government might simply encourage firms to buy the assets or provide some sort government subsidy covering some of the costs.
“You don’t need as many dollars," one source explained, and “the market sets the price.” Such a model would also reduce the likelihood of bank nationalization by demonstrating that the “company is strong enough to attract private capital."
In his presss conference, President Obama said: "We don't know yet whether we're going to need additional money or how much additional money we'll need until we see how successful we are at restoring a level of confidence in the marketplace."