WASHINGTON – The Obama administration’s latest attempt to tackle the banking crisis and get loans flowing to families and businesses will create a new government entity, the Public-Private Investment Program, to help purchase as much as $1 trillion in toxic assets on banks’ books.

The new effort, to be unveiled today, will be followed Tuesday with release of the administration’s broad framework for overhauling the financial system.

A key part of that regulatory framework will give the government new resolution authority to take over troubled institutions that would pose a threat to the entire financial system if they failed.

Under the new powers being sought by the administration, the treasury secretary could only seize a firm with the agreement of the president and the Federal Reserve.

Once in the equivalent of a conservatorship, the treasury secretary would have the power to limit payments to creditors and to break contracts governing executive compensation.

The plan on toxic assets will use the resources of the $700 billion bank bailout fund, the Federal Reserve and the Federal Deposit Insurance Corp.

The initiative will seek to entice private investors, including big hedge funds, to participate by offering billions of dollars in low-interest loans to finance the purchases. The government will share the risks if the assets fall further in price.

When Treasury Secretary Timothy Geithner released the initial outlines of the administration’s overhaul of the bank rescue program on Feb. 10, the markets took a nose dive. The Dow Jones industrial average plunged by 380 points as investors expressed disappointment about a lack of details.

Christina Romer, head of the Council of Economic Advisers, said Sunday that it’s important for investors to know that the administration is bringing a full array of programs to confront the problem.

“I don’t think Wall Street is expecting the silver bullet,” she said on CNN’s “State of the Union.” “This is one more piece. It’s a crucial piece to get these toxic assets off, but it is just part of it and there will be more to come.”

Romer said the new toxic asset program would utilize around $100 billion from the $700 billion bailout fund, leaving the fund close to being tapped out.

Mark Zandi, an economist at Moody’s Economy.com, estimated that the government will need an additional $400 billion to adequately deal with the toxic asset problem, seen by many analysts as key to finally resolving the banking crisis.

“This is a start and we will see how far it goes, but I believe they will have to go back to Congress for more money,” he said.

The Public-Private Investment Program that will be created was viewed as performing the same functions – selling bonds to finance purchases of bad assets – as a similar organization did for the Resolution Trust Corp., which was created to dispose of bad real estate assets in the savings and loan crisis of the 1980s.

According to administration and industry officials, the toxic asset program will have three major parts:

•A public-private partnership to back private investors’ purchases of bad assets. The government would match private investors dollar for dollar and share any profits equally.

•Expansion of a recently launched Fed program that provides loans for investors to buy securities backed by consumer debt. Under Geithner’s plan for the toxic assets, that $1 trillion program would be expanded to support purchases of toxic assets.

•Use of the FDIC, which insures bank deposits, to support purchases of toxic assets, tapping into this agency’s expertise in closing down failed banks and disposing of bad assets.