Updated from 2:02 p.m. EST
U.S. stocks remained mired in negativity Wednesday afternoon, after Treasury Secretary Henry Paulson spoke about the progress of the Troubled Asset Relief Program and offered new proposals for how to spend the $700 billion emergency package's remaining funds.
The Dow Jones Industrial Average was losing 331 points to 8363, and the S&P 500 gave back 38 points to 861. The Nasdaq slid 70 points to 1511.
The status of programs to quell turmoil in the financial space was occupying investor attention. The Wall Street Journal reported ahead of Wednesday's session that the Treasury may begin to require companies to raise private money before gaining access to the Troubled Asset Relief Program.The Journal also reported that American Express (AXP), which on Monday had become a bank-holding company and thus eligible for funds from the Federal Reserve, was attempting to get $3.5 billion in capital injections from the government. Paulson, speaking in Washington Wednesday morning, offered an update on the state of the TARP. "We have taken the necessary steps to prevent a broad systemic event," said Paulson, but he cautioned that the financial system remains fragile and turmoil in the markets will not abate until the housing correction resolves itself. He proposed a broad expansion of the use of TARP funds, and that non-banks may also need access to emergency funding. Paulson also said that remaining TARP funds will be used to target ailing consumer financing markets and support homeowners facing foreclosure. Propping up consumer financing arms of large manufacturing companies such as General Motors (GM), Ford (F) and General Electric (GE) is an effort to stave off bankruptcy, said Matthew Smith, president of Smith Affiliated Capital.
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