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3 banks form plan to shore up credit market

The nation's three largest banks announced Monday a multibillion-dollar plan to shore up the global credit market by acquiring investments that lost value after the mortgage meltdown this past summer.

Bank of America -- the largest bank in Florida and third largest in Central Florida -- has joined JPMorgan Chase and Citigroup in the venture to invest in commercial paper -- short-term debt companies use to help fund their operations.

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The world credit markets suffered lockjaw this summer after skyrocketing home loan defaults roiled the mortgage industry and sliced the value of mortgage-backed securities.

It caused a widespread aversion to risk and led the Federal Reserve to pump money into the financial system, though the latest plan relies more on the banks themselves.

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Bank of America, Morgan Chase and Citi did not disclose how much they will invest in the plan, but some industry experts suggested the total could reach $100 billion.

"This proposal will complement other solutions investors and asset managers may utilize in committing and deploying capital to support more efficient markets," the Treasury Department said Monday.


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