Lawmakers To Pass A Legislation On Rescuing Distressed Mortgages Soon

September 19, 2008 6:05 a.m. EST

Washington, D.C. (AHN) - The U.S. Treasury Department and the Federal Reserve have initialized discussions with the lawmakers on what could be the largest rescue of distressed firms in the history of the country.

U.S. Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben S. Bernanke have proposed to allow financial institutions get rid of mortgage-related assets into a new institution.

Reports have suggested that congressional leaders, who met with Paulson and Bernanke late yesterday in Washington, are planning to approve a legislation to maintain the flow of liquidity in the money markets

The American financial companies have been finding it hard to value the mortgage-related assets and have are harder to trade in the market that faces credit slump.

The government have been taking proactive steps, including the take over of American International Group Inc. following Lehman Brothers Holding Inc.'s bankruptcy and acquiring the two GSEs, Fannie Mae and Freddie Mac.

The Federal Open Market Committee yesterday authorized the Central Banks from major economies are going to inject an additional $180 billion worth of dollar liquidity into the short-term credit markets.

The step to increase capacity of funds available to improve the liquidity conditions in global financial markets.

Overnight, the U.S. Securities and Exchange Commission decided to impose a temporary bank on short selling in financial companies

On early Friday, the Commission announced that it is acting in concert with the U.K. Financial Services Authority and "to protect the integrity and quality of the securities market and strengthen investor confidence."