Treasury Secretary Henry Paulson states the $700 billion government “bailout” program won’t be used to buy banks’ soured mortgage assets as originally planned. The announcement came immediately after a disheartened Wall Street plunged for the third straight session. The news gave edgy investors even more reason to keep selling stocks.

Paulson said the administration will continue to use $250 billion of the program to purchase stock in banks as a way to bolster their balance sheets and encourage them to resume more normal lending. He also laid out a new goal for the program to support financial markets, which supply consumer credit in such areas as auto loans, student loans, and credit card debt. He said that 40 percent of U.S. consumer credit is provided through selling securities that are backed by pools of auto loans and other such debt.

The major indexes were already buried in red before Paulson’s announcement that retailers Best Buy and Macy’s continued to show strain from the weak economy. Now traders are closely watching the fate of U.S. automakers being decided in Washington. President-elect Barack Obama suggested to President Bush that the administration immediately provide aid to struggling automakers to preserve thousands of jobs.