The move is a coordinated effort by the Fed with European and Canadian banks, which plan to inject up to $45 billion in their banking systems, according to reports. The Fed plans to hold auctions of Treasuries in exchange for debt including 'AAA'-rated mortgages sold by Fannie Mae, Freddie Mac and by banks, according to a statement. The Fed also set up the Term Securities Lending Facility, which will be used to lend Treasuries to primary dealers for 28-day periods through its weekly auctions. The agency did not agree to make outright purchases of mortgage debt, something that some analysts had wanted.
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