Treasury Secretary Henry Paulson announced today that the government will use its $700 billion bailout plan to aid non-bank financial institutions that provide consumer credit, like credit cards and auto loans. “The important markets for securitizing credit outside of the banking system also need support," Paulson said. "Approximately 40 percent of U.S. consumer credit is provided through securitization of credit card receivables, auto loans and student loans and similar products. This market, which is vital for lending and growth, has for all practical purposes ground to a halt." Paulson also abandoned government plans to buy up troubled mortgage assets, which was the original goal of the bailout.
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