Paulson changes Rescue Plan
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Paulson changes Rescue Plan
http://www.journalgazette.net/apps/pbcs.dll/article?AID=/20081112/NEWS03/811120266
WASHINGTON – Treasury Secretary Henry Paulson said Wednesday the $700 billion government rescue program will not be used to purchase troubled assets as originally planned.
Paulson said the administration will continue to use $250 billion of the program to purchase stock in banks as a way to bolster their balance sheets and encourage them to resume more normal lending.
He announced a new goal for the program to support financial markets, which supply consumer credit in such areas as credit card debt, auto loans and student loans.
Paulson said that 40 percent of U.S. consumer credit is provided through selling securities that are backed by pools of auto loans and other such debt. He said these markets need support.
"This market, which is vital for lending and growth, has for all practical purposes ground to a halt," Paulson said.
The administration decided that using billions of dollars to buy troubled assets of financial institutions at the current time was "not the most effective way" to use the $700 billion bailout package, he said.
The announcement marked a major shift for the administration which had talked only about purchasing troubled assets as it lobbied Congress to pass the massive bailout bill.
Paulson said the administration is exploring other options, including possibly injecting more capital into banks on a matching basis, in which government funds would be supplied to banks that were able to raise money on their own.
The bailout money also should be used to support efforts to keep mortgage borrowers from losing their homes because of soaring default levels, he said.
A proposal to have part of the bailout funds used to guarantee mortgages that have been reworked to reduce monthly payments for borrowers is an approach the administration continues to discuss, but Paulson did not announce that it would be adopted. Federal Deposit Insurance Corp. Chairman Sheila Bair has pushed for that approach.
Speaking of the first-ever summit of leaders of the Group of 20 major industrial and developing countries, Paulson said this weekend's meeting needs to focus first on how to repair the financial system as a way to bolster the global economy.
Paulson praised a new set of guidelines issued Wednesday by the Federal Reserve and other bank regulators, saying that they addressed a crucial issue of making sure that banks continue to lend at adequate levels.
Re: Paulson changes Rescue Plan
Jugo something had to be done or we for sure would have collapsed. Is the bail out a good thing, absolutely not, but without it I think we would have been worse off. I think how we spend the $800B is the important thing.
Guest- Guest
Re: Paulson changes Rescue Plan
i agree with you bman but paulson is manipulating the agreed money guidelines as stated during the public discussions, before its even off to a good start. it was approved with the impression it would be used to buy defaulted loans initially. also the agreement calls for the independent oversite folks to be installed. and who are they?? uhh...nobody yet. that pisses me off especially now since paulson refuses to tell where the money has gone so far. it needs a re-look asap and independent oversite folks put in place before any more money is spent imho.
floridafun- Jedi Knight
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