Credit Cards, Auto Loans could benefit from TARP changes
November 14, 2008 by admin
Henry Paulson, the Secretary of Treasury recently announced that there would be changes to the $750 TARP package. The original package was designed and sold on the basis that it would be used to help purchase toxic mortgage debts from lenders and financial company portfolios to help free up the credit markets. The program quickly changed course as the U.S. followed the lead of many European countries who began to invest directly into banks to bring up there core capital ratios. This was considered phase one of the TARP rollout.
Phase two now appears to be directed towards consumer lending. Consumers have been directly impacted by the credit crunch as financing for auto loans, student loans, credit lines have almost all but disappeared except for borrowers with outstanding credit. The market for these consumer loans has seen the secondary marketplace disappear, resulting in limited funds available for consumers. The government believes that investing into these firms will help with more funds for student loans, credit cards, personal and small business loans, thus spurring consumers to begin purchasing and help the economy grow.