Treasury Secretary Henry Paulson has angered Congress by retreating from the plan he sold to them in October to use the $700 billion to buy so-called 'toxic assets' --i.e., mortgage backed securities. The Troubled Asset Relief Program (TARP) will now be used to try to free up consumer credit. Treasury and the Federal Reserve are now developing a lending facility that will use TARP to provide investment dolars to investors to encourage them to buy securities backed by credit cards, auto loans or mortgages. It is hoped that such liquidity will increase the availability of student loans, auto loans and credit cards. Of course this program will not start until after Paulson completes the capital purchase program (American Express and GE are in line now). Paulson opposes using TARP for the auto industry, believing it is intended for financial institutions.
For good or bad only $60 billion remains from the $350 billion initially authorized by Congress. Paulson, or President Obama's Treasury secretary, will have to make the case for the second $350 billion draw. Paulson is unapologetic about his change in direction. Unfortunately, foreclosures are increasing and the Dow Jone Industrial Average keeps dropping.
For good or bad only $60 billion remains from the $350 billion initially authorized by Congress. Paulson, or President Obama's Treasury secretary, will have to make the case for the second $350 billion draw. Paulson is unapologetic about his change in direction. Unfortunately, foreclosures are increasing and the Dow Jone Industrial Average keeps dropping.
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