The federal government, in what will be its most far-reaching attempt yet to contain the financial crisis, is poised to establish a program to let banks get rid of mortgage-related assets that have been hard to value and harder to trade, CNNMoney.com reported.

Treasury Secretary Henry Paulson announced the framework of the plan this morning. “The federal government must implement a program to remove these illiquid assets that are weighing down our financial institutions and threatening our economy,” he said.

Many details of the plan remained unclear, but Paulson acknowledged the government would take on “hundreds of billions of dollars” in obligations.

Sen. Richard Shelby, R-Ala., the ranking member on the Senate Banking Committee, told CNN that the latest plan from the Treasury Department could cost $500 billion.



When combined with all the other money committed by the Federal Reserve and the Treasury Department in the form of loans and investments, the new figure on attempts to stem the credit crises would be $1.3 trillion.

But that doesn’t mean that’s the cost to taxpayers.



The price tags on today’s bailouts bear “no direct translation to the taxpayer cost,” said Lyle Gramley, a former Fed governor now with the Stanford Group, a Washington policy research firm.



Here’s why: The bailouts are, in one form or another, loans or investments. How much they end up costing (or making) depends on a number of factors, including how the economy holds up and when the real estate market recovers.

“A lot depends on whether or not we get in a severe recession and how quickly we turn things around in housing,” Gramley said.

In exchange for their stepping in, the Fed and Treasury Department are getting assets as collateral (in some cases, income-producing assets and salable assets) as well as majority ownership stakes in American International Group Inc., Fannie Mae and Freddie Mac. They’ve also claimed veto power for corporate decisions and a No. 1 spot among stakeholders who get paid first.