US Treasury Secretary Henry Paulson delivered an update of Troubled Asset Relief Program and said that purchasing troubled assets which was the original intention of the $700 billion rescue package  is not an effective use of the program. Also the other half of the 700 billion U.S. dollar financial rescue program will not be used to buy troubled properties as originally planned.

The program will then be used to alleviate the burden on consumer credit in such areas as credit card debt, auto loans and student loans.

U.S. stocks plunged for straight three sessions as consumer spending drop and will contribute to a stretch farther the duration of the economic downturn.

"It was clear to me by the time the bill was signed on October 3rd that we needed to act quickly and forcefully, and that purchasing troubled assets - our initial focus - would take time to implement and would not be sufficient given the severity of the problem," Paulson said. "In consultation with the Federal Reserve, I determined that the most timely, effective step to improve credit market conditions was to strengthen bank balance sheets quickly through direct purchases of equity in banks," he added.

There is a change from the original plan to unfreeze credit markets through the purchase of troubled assets in September. Instead, Paulson said, the money should be used to attract private capital. He also mentioned that the private sector must work in tandem with public assistance.

"We are carefully evaluating programs which would further leverage the impact of a TARP investment by attracting private capital, potentially through matching investments," he said.

The Treasury Secretary also noted that prior government actions "have clearly helped stabilize the financial system," and that the steps taken to prevent a systemic collapse have worked.