The US has given details of a $500bn (£343bn) plan to encourage private investors to buy up toxic assets.
The plan will offer subsidies in the form of low-interest loans to private investors to encourage them to buy troubled mortgages and other loans.
Writing in the Wall Street Journal, US Treasury Secretary Timothy Geithner said the measures were needed to help the financial system recover.
The plan is due to be formally launched later on Monday.
The "Public-Private Investment Programme" will purchase the troubled mortgages and securities that have been at the root of the credit crisis from banks.
It will initially provide financing for $500bn of toxic assets, with the potential to expand up to $1 trillion.
"Over time, by providing a market for these assets that does not now exist, this programme will help improve assets values, increase lending capacity by banks, and reduce uncertainty about the scale of losses on bank balance sheets," Mr Geithner said.
He said that encouraging the private sector to take part would be better for the taxpayer as the risks of purchasing toxic assets would be shared.
However, there are fears that Wall Street might be reluctant to work with the government after the backlash over bonuses at bailed-out firms like AIG.
Leave Your Comments