up to $12 in loans for every dollar of private equity at risk.

Banks will submit pools of loans for auction. Banks said the plan’s structure was favourable to them as it gave them the last word on whether to sell their toxic assets.

●$75bn-$100bn from Tarp invested with private equity in a public-private fund worth $500bn

●Investors and public-private funds buy bad loans from banks at auction, with loans guaranteed by FDIC

●Five fund managers approved by Treasury to invest private capital and public-private fund equity in toxic securities

●The Fed’s Talf programme expanded to include toxic securities, including residential mortgage-backed securities