Financial Market Update-TARP Shifts Focus to Consumer Markets

The Dow Jones index went down early today and stayed there, ending with a 411-point loss, or down about 4.73 percent. The S&P 500 was down 5.19 percent and the Nasdaq was down 5.17 percent. Part of the decline involved retailer Best Buy Co. (listed on the S&P 500), whose stock lost 8 percent today. “Since mid-September, rapid, seismic changes in consumer behavior have created the most difficult climate we’ve ever seen,” Best Buy CEO Brad Anderson said in a statement today.Standard & Poor’s has removed the troubled General Growth Properties from its index. As reported by CPN, the Chicago based REIT, the second-largest U.S. mall owner, said in a filing with the SEC on Monday that it may go bankrupt if it can’t refinance some $1 billion in debt due in December. U.S. Treasury Sec. Henry Paulson hasn’t made his retirement plans public yet–perhaps the lecture circuit awaits him–but he’s probably already looking forward to January 20. In any case, today the secretary announced a change in strategy for the TARP program. The second half of the $700 billion allocated to the program will be to help support consumer credit markets–those auto loans, student loans and credit card loans that are much more scarce than they used to be. The sudden shift in direction for TARP is an acknowledgment that the original plan for the money hasn’t worked. “Over these past weeks we have continued to examine the relative benefits of purchasing illiquid mortgage-related assets,” Paulson (pictured) said this morning. “Our assessment at this time is that this is not the most effective way to use TARP funds.” Details of the new, improved TARP will no doubt be forthcoming from Treasury, involving the financing of private entities willing to buy consumer credit-backed securities. No word yet on whether Treasury plans to charge its borrowers 20-plus percent interest, and higher if payments are so much as a day late.