Senate Majority Leader Harry Reid released at statement Monday following the announcement of the Treasury Department's plan to purchase toxic assets.
Earlier in the day, Treasury announced that it would partner with private investors to buy $500 billion in real estate loans and mortgage-backed securities from banks.
This program would grow, Treasury said, to possibly $1 trillion over time.
The plan would call for the government to provide up to $100 billion in funds for the program, and would require the government to share in profits made on investments.
Banks involved in the program would identify loans they would like to sell, and the Federal Deposit Insurance Corp. would auction them to investors.
Treasury and investors would both provide equity capital to winning investment funds, and the FDIC would guarantee debt issued to buy the loans.
The Treasury Department plan is based on the sound principle that if we are to revive our economy, we must unfreeze the credit markets so people can get the loans they need to keep their small businesses open, buy a car or send their children to college, Reid said in his statement.
Like any investment, this plan carries the potential for both risk and reward.
Despite the potential risks, Reid said, above all, we must act - one risk we will not take is standing on the sidelines and doing nothing while a bad situation gets worse.
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