The new $800 billion rescue plan poised to bail out Main Street

I surfed through CNBC and Bloomberg last night and Treasury Secretary Hank Paulson was once again talking to the press. I do not have the luxury to watch these channels lately unlike in the previous weeks since my wife’s work schedule has now changed back to regular day shift. In other words, she gets absolute control of prime time television.

Nevertheless, the morning news reported what the press conference was all about. Surprise, surprise? Not quite. The Federal government has unveiled another multi-billion bailout package amounting to US$800 billion this time. If you recall, Congress approved last month a US$700 billion rescue plan that was supposed to ease the credit markets for businesses and consumers to gain access to credit. However, half of that amount has already been allocated to the financial sector but the credit markets has yet to fully thaw leading Federal authorities to realize that their plan did not materialize the way they were hoping for.

This new stimulus plan, on the other hand, claims to directly benefit consumers and businesses. Unlike in the first stimulus plan where the government infused funds directly into ailing banking institutions, the new package will buy troubled assets of institutions that are involved in providing student loans, credit cards, and auto loans. Likewise, it will also infuse massive amounts of money to improve liquidity of mortgage lenders Fannie Mae, Freddie Mac, and Ginnie Mae so that they will be able to service Americans who are planning to own a home but could not gain access to financing because of the credit crunch.

Government wants to make sure that struggling homeowners, who have seen their home equity dropped dramatically since the housing bubble burst, will have a better chance to sell their homes because potential buyers now have access to financing. This is also a welcome news to automakers who are hoping that the stimulus would make it easier for consumers to get car loans, something that they have been desperately wanting since this crisis began as flagging sales has threatened to put them out of business.