The governmentwill tip in $100b to finance the purchases, utilizing the resources of the $700b bankbailoutfund, theFederalReserveand the Federal DepositInsuranceCorp.
Two banks went bust in 1965, leading to calls for depositors to be made good by the government (which would then recover what it could from the liquidation ofbank assets), for the introduction ofdepositinsurance and the creation of a government-backed industrial bank.
Stresses in housing markets impose another constraint on lending: that may be why Sheila Bair, head of the Federal DepositInsurance Corporation, an American bank regulator, broke ranks with her government and criticised the rescue plan for not addressing foreclosures.