(RTTNews) - Top government agencies are working to supply themselves with much needed liquidity Wednesday, as they scramble to raise capital to salvage crumbling financial institutions on Wall Street. The U.S. Treasury Department is working to raise $40 billion through the sale of cash management bills, which it will then send to the Federal Reserve as they attempt to salvage the swiftly disappearing bedrock of Wall Street.

The new borrowing program was set up at the behest of the Federal Reserve, the Treasury said in a statement.

“The program will consist of a series of Treasury bills, apart from Treasury’s current borrowing programs, which will provide cash for use in the Federal Reserve initiatives,” Treasury said.

The auction results are expected in the early afternoon.
Overnight, the Fed agreed to provide up to $85 billion to embattled insurance provider American International Group Inc. (AIG) in a secured loan collateralized by all the assets of the company, and of its primary non-regulated subsidiaries. As a result of the loan, the government will receive a 79.9 percent equity interest in AIG.

The move is the latest government intervention aimed at controlling the spread of the recent financial crisis.

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