Henry Paulson Backpedals And Stocks Stumble

November 12. 2008

President Barack Obama - a man with his work cut out for him

After weeks of proclaiming the $700 billion dollar bailout money, funded by U.S. taxpayers, would be used to buy up “toxic debt” Treasury Chief, Henry Paulson is backpedaling.

Henry Paulson - a man given a tough job to halt a gargantuan crisis in weeks

The change in plans is being attributed to deteriorating financial circumstances in America. This decision is thought to fall under the Bush administration. No word on what the Obama administration has to say about it.

After Paulson’s televised speech this morning, U.S. stocks tumbled another 400 points.

Paulson changes focus to pumping up banks.

Wed Nov 12 2008 16:45 EST - Treasury Secretary Henry Paulson did a lot more backpedaling than explaining in his Wednesday update of the U.S. government's $700.0 billion financial rescue package.

The original plan was to use the money in the Troubled Assets Relief Program to purchase, as the name suggests, troubled assets, especially mortgage-backed securities. Well, not anymore, Paulson revealed. Instead, the administration decided that buying troubled assets of financial institutions at the current time was "not the most effective way" to use the bailout package.

The government will use $250.0 billion of the money to purchase stock in banks it deems in need of a boost and encourage them to resume more normal lending. In addition, the focus of the program will change: It will now support financial markets, which deal with consumer credit in areas such as credit-card debt, auto loans and student loans.

http://www.forbes.com

Stocks skid on news gov't won't buy banks' assets

Wednesday November 12, 4:36 pm ET - Stocks plunge on dismal corporate reports, news gov't won't buy banks' scoured mortgage assets

NEW YORK (AP) -- A disheartened Wall Street fell for the third straight session Wednesday as investors absorbed another series of dismal corporate reports and news that the government won't buy banks' soured mortgage assets after all. The Dow Jones industrials skidded more than 410 points, and all the major indexes dropped more than 4 percent.

According to preliminary calculations, the Dow shed 411.30, or 4.73 percent, to 8,282.66. It was the lowest close for the Dow since its 5 1/2-year low of 8,175.77 reached on Oct. 27.

http://biz.yahoo.com

Washington's $5 Trillion Tab

Fighting the financial crisis has put the U.S. on the hook for some $5 trillion a report says. So far.

For all the fury over Treasury Secretary Henry Paulson's $700 billion emergency economic relief fund, it seems downright puny when compared to the running total of the government's response to the credit crisis.

According to CreditSights, a research firm in New York and London, the U.S. government has put itself on the hook for some $5 trillion, so far, in an attempt to arrest a collapse of the financial system.

http://www.forbes.com