Paulson Revamps Rescue Plan to Include Auto Lenders

Score one for auto finance.

The good news: Treasury Secretary Henry Paulson announced today that rather than buying up distressed mortgage assets from Wall Street firms, the government will instead provide direct injections of capital to troubled firms. The better news: Nonbank financial institutions, including auto financiers, credit card firms, and student lenders, may qualify for funding.

“Illiquidity in this sector is raising the cost and reducing the availability of car loans, student loans, and credit cards,” Paulson said during a speech at the Treasury in Washington. “This is creating a heavy burden on the American people and reducing the number of jobs in our economy.”

Of the $700 billion bailout plan approved last month, $350 billion has already been allocated by Congress. The remainder, though, will be used to help unburden consumer credit companies.

Lawmakers, meanwhile, continue to push for aid to the ailing automakers, though Paulson is resisting.