$200b plan to bring consumer credit out of the deep freeze.

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The U.S. Treasury Department unveiled a plan last week to create an up to $200 billion credit facility that would bring liquidity to the market for asset backed securities tied to small business loans and consumer debt such as credit card, auto and student loans.

The steps are an attempt to bolster a secondary market that has been frozen to varying degrees since bad residential subprime touched off a panic about underwriting standards and the risk surrounding asset backed securities during the summer of 2007.

Treasury Secretary Henry Paulson, in a statement, said that the problems had worsened recently. Issuances of asset backed securities tied to consumer and small business loans had been around $240 billion in 2007 he said, but had "declined precipitously in the third quarter of 2008 before essentially coming to a halt in October."

Paulson highlighted the danger this could have on an already-sagging economy, which experts say is now in a serious recession, because it would cut off consumer spending, the lifeblood of growth. The efforts coincide with the start of the holiday shopping season last Friday, a period where retailers typically make almost half of their annual sales.

But Paulson framed the problems as having an even more fundamental impact on the financial health of American households, who could be cut off from capital or face higher lending rates.

"Millions of Americans cannot find affordable financing for their basic credit needs," Paulson said. "And credit card rates are climbing, making it more expensive for families to finance everyday purchases. This lack of affordable consumer credit undermines consumer spending and, as a result, weakens our economy."

The credit facility appears to be a different approach to thawing the lending markets.

Paulson had come under criticism in recent months for proposing a plan to buy toxic mortgage securities from banks' balance sheets and other efforts to inject liquidity directly into financial firms. Many institutions, instead of lending out the cash as officials had intended them to, hoarded the borrowed funds instead to strengthen their own position amid the tumult.

Paulson said that government underwriting of asset-backed securities could expand to include commercial mortgages, what is welcome news for real estate investors.

Although defaults for commercial properties have been low, the availability of financing for office buildings has been hit with the same problems as the larger lending market. In places like Manhattan, where large office buildings can command prices of more than a billion dollars, major property sales have ground to a halt as a result of the credit crunch and there are concerns that many landlords with sizeable mortgages will not be able to refinance their obligations when the debt comes due.

Reviving the secondary debt market, wherein lenders break loans up into securities segregated by risk and sell them off to a myriad of investors, appears to be a key step in restoring the health of the city's real estate market. Before the credit crunch, the process of securitizing debt had created unprecedented levels of mortgage financing and drove building values to record heights.