The US Treasury is prepared to capitalise a special financing facility to fund holdings of asset-backed commercial paper under a programme being developed with the Federal Reserve, Hank Paulson told the Financial Times on Wednesday.

In an interview, the Treasury secretary said that the idea was to provide financing to buyers of AAA-rated ABCP on a non-recourse basis, to encourage them to start buying these securities, which bundle up cash flows from credit cards, car loans, student loans and other consumer credits.