The Treasury Department is now offering borrowers the option to obtain a loan that is not guaranteed by the U.S. government, an important step toward ensuring that the government doesn’t put borrowers in danger of losing their money, according to a memo obtained by The Hill.
The program, dubbed the Foreign Exchange Loan Program, allows borrowers to secure loans from the Federal Reserve Bank of New York, the central bank, the Federal Deposit Insurance Corporation and other government agencies.
The program, which began in 2018, was created to help small- and medium-sized businesses and the middle class avoid losing their savings and other assets, which could be worth as much as $2 trillion.
The Department of Treasury has said it will launch a pilot program to make the program available to borrowers next month.
The Office of Thrift Supervision, the Treasury Department’s central banking agency, has not yet released any details on the program.
The Treasury has offered loans to the program since 2012.
The Federal Reserve has provided the program to about 4 million borrowers who have used the federal government’s loan guarantee program, according the Treasury’s statement.
The programs have been expanded by the Obama administration in 2017.
The Foreign Exchange Lending Program has the potential to save tens of millions of dollars for the government, according a Treasury official, because borrowers can apply directly with the agency, rather than going through a bank.
In addition to saving borrowers money, the program allows the government to guarantee loans without the need for a federal loan guarantee agency, or Fannie Mae and Freddie Mac, which are the primary financial institutions that provide the government’s mortgage-backed securities to the financial institutions, the official said.
The U.N. estimates that roughly 3.4 million people have been affected by the program, and the Federal Housing Finance Agency estimates that the program has saved taxpayers up to $300 billion.
