Bailout Watch 169: Sec. Paulson Changes the Game
Treasury Secretary Henry Paulson has announced that the $700b government rescue program will not be used to purchase troubled assets as originally planned. Just like that. I swear. MSNBC reports that turnabout is fair play. “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.” That said, the TS isn’t totally shit-canning the previous plan: “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.” So, that leaves $450b, right? Where’s that going to go now? “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.” Good news for the domestics? Not overmuch. Any recovery in the auto loan biz will still be chasing diminishing demand. To wit: Toyota’s been hawking the Hell out of its zero percent financing and its October sales dropped 25 percent.