Gov't Moves to Help Businesses, Households

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    NEWSLETTERS

    Bank-owned home for sale.

    The Federal Reserve and the Treasury Department announced new plans Tuesday to loosen credit markets. 

    Lending and borrowing have grounded to a virtual halt in recent weeks.

    The Fed has established the Commercial Paper Funding Facility (CPFF), which will purchase short-term commercial debt, also known as commercial paper.

    "The Treasury believes this facility is necessary to prevent substantial disruptions to the financial markets and the economy," said the Federal Reserve in a news release.

    The commercial paper market is widely used by companies to fund day-to-day business operations such as payroll or purchase of inventories for stores.

    "Their difficulties placing commercial paper have made it more difficult for those intermediaries to play their vital role in meeting the credit needs of businesses and households," said the Fed.

    The provisions come less than one week after a $700 billion bailout plan was signed into law.