U.S. Treasury Secretary Henry Paulson laid out projected changes in the $700 billion bailout plan on Wednesday, changes that dramatically alter the original intent of the massive spending program.
The buyout of troubled mortgages under the current Treasury Asset Recovery Program (TARP) will not help unfreeze the credit market to get banks to lend to each other or help with the current economic crisis, Paulson said. So rather than move forward with that plan, the bailout funds will go toward shoring up consumer lending.
The program had already been put aside so that $250 billion could be pumped into banks to shore up their liquidity under the Capital Purchase Program. The government got equity stakes in the banks in exchange.
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