US financial rescue plan revised

US Treasury Secretary Henry Paulson says the US government is not going to go ahead with its plan to buy up devalued mortgage assets from the country’s banks.

Paulson said it will be more effective to invest directly in strenghtening wider financial institutions.

He says the action taken so far means the financial system is not going to collapse.

“Both at home and around the world we have already seen signs of improvement. Our system is both stronger and more stable that just a few weeks ago. Although this is a major accomplishment, we have many challenges ahead of us. Our financial system remains fragile in the face of an economic downturn here and abroad and financial institutions’ balance sheets still hold significant illiquid assets; market turmoil will not abate until the biggest part of the housing correction is behind us.”

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tags: Economy