Feds unveil plans to unfreeze consumer debt market

WASHINGTON — The government has introduced a pair of new programs that will provide $800 billion to help unfreeze the market for consumer debt which Treasury Secretary Henry Paulson calls vital to supporting the economy.

Paulson says key markets for consumer debt such as credit cards, auto loans and student loans essentially came to a halt in October. He says the new programs are aimed to get lending back to more normal levels.

Paulson says all the government programs have been aimed at supporting the lending that is vital to the economy.

Comments

[cadawa]

Congress has the power to compel banks to lend, if we had a real congress. The banks have a congress, we don't.
Stuffing money in the pockets of those who authored the economic collapse lacks sense and is akin to national suicide.
Just look at what the banks have done to date.
Taken advantage of the crisis they created to jack up lending rates to usuary levels.
Deliberately shut down the credit market by refusing to lend to qualified businesses and individuals AFTER the Fed and congress have injected trillions of dollars of liquidity into the markets.
Spent taxpayer money at luxury resorts, rewarding large investors and bonuses to top executives.
A pland to restore liquidity? Give me a break. This a plan to complete the theft of the US treasury by the financial community.
Obama is a fool for buying into it.
For eight years we had an ignorant fool in the White House. Now it looks like we are going to have an intelligent fool. For ordinary Americans its a zero sum game. We lose either way.

[DonCosenza]

Now we can buy more chinese-produced goods and Japanese-produced cars. W00t!

(Note: I'm all for helping out tuition aid, as long as it's not for investment banking.)

[leftLibertarian]

Let's compound the problem by making credit easier to obtain.

Genius!

[marytny]

Wait! I worked hard NOT to have credit card debt! I stay away from malls, etc
I only use Amex and have to pay it off each month. So I get the bill for the
Big TV and vacations that I DIDN'T TAKE?

[jdmba]

All I know is that kids need to go to college. Ideally, they would stop all the tuition increases and roll back the costs of higher education such that you could pay for it with a job, but barring that, they need more grants and loans.

[manitoumackinac]

Lets make an insolvent population even more insolvent!

[antenna123]

yay

[joebaggadonuts]

Can't anyone pull the switch on the tracks for this runaway train? Please!!!!

If the foolish/thieving free marketeers keep pumping in fake money, there eventually won't be any left. Eventually is pretty damn close, it seems. We need someone to say enough and to turn this train toward a different station. Sustainable jobs, green energy yada yada.

Hello. Anybody home?

[Beninn]

If nobody knows exactly how much debt is out there, then how do you keep throwing money at that which you have no idea what it will take to restore confidence, IF, after you throw $700 billion at it (thinking that should settle Nervous Nellies) more Citibanks or AIGs or Big 3 automakers continue to show up almost daily on your doorstep on the verge of collapse?

Doesn't the time come when you say, "Everybody stop! Let's try to get on top of this by figuring out how much debt is out there (hungry mouths), and then we'll figure out exactly how much money we have on hand (or in this case, how much we would have to borrow from China, Japan, Saudi Arabia) and THEN make the decisions about who gets bailed out and who doesn't"?

[SwingingFromCenter]

I have to admit, I'm real fuzzy as to what this new program is doing.

Is it paying off existing defaulted credit card debts? Is it paying off existing credit card debts that are current? Or is it just giving money to banks so they'll give people more credit cards, with the new cards guaranteed? It doesn't explain this well, at all.

[Beninn]

The Treasury is already empty. What this is about is borrowing (from China, Japan, Saudi Arabia) to our limit, and giving it all away before January 20th.

All that they are leaving for the incoming administration is half of the original $700 billion that Congress appropriated in the initial crisis days just prior to the election.

The only reason that they're leaving that is because while Congress appropriated what Paulson originally asked for ($700 billion, but it really turned out to be $840 billion after Congress threw in a few extra sweeteners in order to get enough Republicans on board to pass the thing), Congress crafted it so that Paulson could only get his hands on half of it then. "Let's see what happens after you spend 50% of it".

UPDATE: Paulson and Bernanke are now reported to be demanding Congress release the rest of that money, too.

[SwingingFromCenter]

And you didn't answer my question. I know what the bailout in general is about without the rhetoric. What I'm fuzzy on is the purpose of this plan.

Is this money going to pay off existing consumer debt so that they no longer have the obligations? Or is it simply making it so the companies will give more credit cards and get consumers even further in debt.

[samval]

So let me get this straight:

- consumers have $850 billion in credit card debt

- the government is giving $800 billion to credit card companies so they can enable consumers to get into more debt.

Why not just pay off everybody's credit card bills instead?

[antenna123]

If you don't buy a big screen the terrorists win!

[Beninn]

That would put the bankruptcy lawyers and credit counselors out of business.

[antenna123]

Wow, so now the government is literally borrowing from the chinese, giving it to consumers, so they can buy chinese goods.

Great.

[Veri]

A win-win situation. But not for you.

[0emissions]

Loans for cars is simply supporting the auto industry.
America does not need more autos on the streets and roads.
We need to rethink personal mobility.
We need light rail and options to the polluting, NOISEY ,stressful, health hazard automobile.

[Veri]

Gas prices down. How long before SUVs make a comeback in the forgetful American consumer's mind?

[lisakaz2]

Doesn't the government already subsidize student loans?

[ObjectiveRealist]

If you're poor enough, you can qualify for a full ride. If you have more money than that but not so much that you disqualify for any aid, your real options are University or State. Only the wealthy, and statistically negligible fractions of the poor, can afford competitive schools.

[Veri]

Yes. The government does. However, over the last year or two, corruption within the loan system has resulted in larger debt-loads for students. Go figure.

[Maxiesid]

I think I've got it now. So, Paulson is saying to all us 'consumers' out here... "we are in deep, deep, trouble. Unless you all go out right now and start spending money on big ticket items, our economy is going to go down in flames. So, what we have decided to do to help you out is that we are going to borrow money from China... lots of it at whatever rates they want... and we will give it to the banks.
Now, how this helps you is that the banks will then give you credit, and you can buy things to save the economy. Now, just get out there and spend some for the gipper, and dont ask questions like why, if we can give money to the banks we can't give it to you to help pay the debts you already have... that is not the way it works, that money belongs to the bankers (and the rest of my friends, and me) .... you don't deserve money, you are a mindless consumer." I don't think they understand, they have been to that well too many times, it is now dry. Personally, I am afraid.. and I am NOT going to buy ANYTHING, (unless it is food, or to pay for heat)... .. let alone anything on credit.

[Angelic11]

Oh my God,

This would be so very funny and it hurts me to laugh cause it is so d@mn TRUE!

[lisakaz2]

You nailed it. I use credit but pay it off and buy stuff I have to purchase anyway. I'm maybe living 6 weeks ahead of my means.

[Lahonda]

I wonder how one would describe a tax and yet not call it just that. This Republican regime has squandered far more than we know...

[Veri]

Could not have done it without the Dems.

[gfs5541]

Nonsense. This is just another money giveaway cleverly masked as a bailout. If these institutions did a better job of renegotiating loan payment terms with their clients they would've been a lot better off, but now they want to give money away thinking these companies will use the money to give it to us via loans?! Bull. Wait for Obama’s people to come in. Don’t listen to these Bush Administration lackeys no more.

[Veri]

Aha, the nail on the head. Give consumers more money under the same bad loan conditions (usurious?) and watch it all go to crap again. Why aren't the Dems proposing sensible new regulations on the financial industry? Bought and paid for already?