Here is something for the cheap seats in the back. Those living in the best- known street in the US – Main Street – are seeing federal aid of their very own. The Federal Reserve on Tuesday announced two facilities aiming to bring mortgage rates down and restart lending to students, small businesses, on credit cards and to anyone out there still considering buying a car.

The Fed, in one sense, is clearing up the unintended consequences of bail-outs past. Yields on agency debt leapt last month after the Federal Deposit Insurance Corporation’s guarantee for senior bank debt raised that paper’s appeal compared with securities issued or backed by the government-sponsored enterprises. Buying these assets, in the hope that lower funding costs feed through to borrowers, is not new – the Treasury had at the end of October purchased about $27bn in agency mortgage backed securities since the GSEs were taken into conservatorship. But the Fed’s scheme, at $500bn for MBS, plus $100bn for agency debt, deploys a far larger club to the task of beating down mortgage rates.

The second facility, which will lend up to $200bn to a wide range of investors against newly issued securities backed by consumer loans, represents a further shift by the authorities. The Treasury is trying to eek more from its troubled asset relief programme funds through leverage, contributing $20bn to the Fed’s facility. The latter, meanwhile, is lending ever-more widely in its effort to reach the public. The Fed, which took most of the risk in Citi’s latest rescue package, is clearly in expansive mode, potentially adding about $800bn to its already heaving balance sheet.

As government schemes proliferate, the nearer-term concern is whether such facilities will succeed in boosting lending and, of course, borrowing. House prices continue to tumble and unemployment is rising. Main Street may prefer to hunker down for winter rather than revive the free-spending ways of the past.

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