The Federal Reserve is getting ready to launch a new program that should make it easier for consumers to get credit card and auto loans -- though not necessarily at lower interest rates. The availability of loans would stem from reviving the moribund asset-backed securities market. The Fed reiterated its plans to start this program Wednesday afternoon, stressing the still "extremely tight" credit conditions for households and firms. Read more on the Fed. The government appears to continue to demonstrate its commitment to efforts to jump-start the asset-backed securities market given its importance to consumer lending," said Kevin Duignan, head of U.S. ABS at Fitch Ratings. In the last part of a three-pronged plan aimed at getting banks to lend more, the U.S. central bank next month will start offering up to $200 billion in loans to investors that hold AAA-rated securities backed by new consumer and small-business loans. Three-part plan The central bank unveiled TALF, short for Term Asset-Backed Securities Loan Facility, in late November after investors fled securitized debt. Spreads on these pools of mortgages and credit-card loans had spiked in the wake of the September collapse of Lehman Bros., indicating a jump in costs for lenders of this debt. From Libor minus 1 basis point before the credit crunch started, spreads zoomed to Libor plus 140 points at the start of September -- and then hit 575 basis points, the equivalent of fully 5.75 percentage points, at the start of December. With risk fears high, new issuance plunged. If disruption of these markets went unaddressed, it could further choke off already tight consumer credit, the Fed said. The first two programs aimed at mortgage-related securitizations have had some success. Mortgage rates hit historic lows earlier this month, and refinance volumes ballooned. But the asset-backed program for credit cards faces a lot more uncertainty, investors say, because the Fed won't act as a buyer of last resort -- as it has with the mortgage-related debt. Instead, it will encourage investors to use the Fed as a cheap bank by offering below-market loans to investors that can offer new asset-backed securities as collateral. There's no guarantee these investors will go along. "We're not sure the program is enough to get investors interested in buying asset-backed securities. It's not like the Fed is providing capital for the asset issuer," said Sanjay Sakhrani, a stock analyst who follows credit card companies at Keefe Bruyette & Woods. If investors do return to this market, issuance of new asset-backed securities will rise, indicating the originators of these loans can pool them and sell them to investors. This offloading of loans into the secondary market would benefit big card companies such as J.P. Morgan Chase , Capital One Financial Corp. and Discover Financial Services . When they can't securitize these loans, they hold them on their balance sheets and must allocate capital to support them. That's a cost. Assets like "credit cards, autos and consumer loans -- the banks never held them on their books," said Ron D'Vari, chief executive at NewOak Capital, a New York firm that advises companies on investing in structured products. "The cost of capital is so high, ultimately the borrowers have to bear that," he said. Issuing more asset-backed deals, and thus gaining cheaper access to funding for their credit-card loans, could ultimately prompt these lenders to pass on lower costs to consumers by lending more freely -- say, by extending credit lines. Still, analysts say even heavy appetite for new asset-backed deals may not result in lower rates for consumers. "The question is, will they keep consumer rates high and use the excess net interest income to subsidize a lot of other losses, or will they lend it out," said Ed Grebeck, debt markets strategist for Tempus Advisors in Stamford, Conn.

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