The recent steps taken by the U.S. government to shore up financial institutions are very positive in terms of addressing the weakness in investor confidence, says Fitch Ratings in a research note.

The rating agency observed that recent steps taken by the government are already proving helpful in restoring confidence in the banking system. “The programs implemented provide real benefits for banks to be able to shore up key credit fundamentals. Specifically, the programs provide ample levels of liquidity in the market, meaningful levels of new equity capital, reliable channels to aid in the disposal of troubled and illiquid assets from bank balance sheets, and open access to funding markets on what should prove to be economically viable terms,” it said.

Fitch also noted its positive view of the programs reflects the immediacy with which capital and funding are now available. “The size of capital, funding, liquidity and troubled asset purchase programs are appropriately sized to allow the banks to truly tackle the challenges they face,” it added.

The firm expects these programs “will be widely used by banks and will prove effective in allowing banks to address sources of current and recent financial stress, which have been greatly centered in residential real estate related exposures. The size of the programs should provide the banks with resources to attack emerging problems in the broader economy that are likely to create challenges in bank loan portfolios beyond residential real estate.”