WASHINGTON —

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The government has abandoned the original centerpiece of its $700 billion rescue effort for the fiscal arrangement and will not use the money to purchase troubled bank assets.

Treasury Secretary Henry Paulson said Wednesday that the giving will continue to employment $250 billion of the program to purchase stock in banks as a way to bolster their balance sheets and encourage them to resume further normal lending. He also announced that the administration was looking at a greater expansion of the program into the markets that provide sustain for credit card debt, auto loans and close examiner loans.

Paulson before-mentioned 40 percent of U.S. consumer credit is provided end selling securities that are backed by means of pools of auto loans and other of that kind debt. He said these markets need support.

“This market, which is vital for lending and increase, has concerning all practical purposes ground to a halt,” Paulson uttered.

On the egress of using the $700 billion bailout package to provide help to ailing auto companies, Paulson said the dispensation preferred an approach that would urge without interruption support to that industry from other legislation Congress passed this fall.

Paulson said the administration is exploring other options, including expanding the program beyond banks to nonbank financial institutions which provide essential credit to both businesses and consumers. He suggested that capital could be provided to institutions put on a matching groundwork in which the government would supply money to those able to rouse money without ceasing their own.

Providing an update on the largest form of sovereignty bailout in U.S. history, Paulson said that the effort was showing results but that more efforts were needed given the most severe downturn being faced in housing.

“Our financial system remains fragile in the face of an economic downturn here and before the public,” Paulson said. “Market turmoil will not abate until the biggest part of the protection correction is behind us. Our primary focus be required to be recovery and repair.”

The administration decided that using billions of dollars to purchase troubled assets of financial institutions at the current duration was “not the most effective way” to exercise the $700 billion bailout package, he said.

The announcement marked a greater shift for the administration which had talked only not far from purchasing troubled assets as it lobbied Congress to thrust the massive bailout bill.

The bailout wealth also should have existence used to support efforts to keep mortgage borrowers from losing their homes on this account that 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 any approach the administration continues to discuss, Paulson said, notwithstanding he indicated it would not be a part of the rescue program. He said it went beyond the intent of the legislation Congress passed on Oct. 3.

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