Updated from 2:07 p.m. EDTStocks on Wall Street turned from sharply green to decisively red Tuesday after the Treasury Department outlined a plan to invest $250 billion in U.S. banks. The Dow Jones Industrial Average, up more than 400 points earlier, was lately down 186 points at 9201, and the S&P 500 was lower by 19.8 points at 983. The Nasdaq was giving back 64 points at 1780. Ahead of Tuesday's session, Treasury Secretary Henry Paulson said his agency would dedicate $250 billion of the $700 billion bailout package to buying equity positions in U.S. banks. Of that $250 billion, the government would use about $125 billion to buy preferred shares in Goldman Sachs ( GS), Morgan Stanley ( MS), JPMorgan Chase ( JPM) , Bank of America ( BAC), Merrill Lynch ( MER) , Citigroup ( C), Wells Fargo ( WFC), Bank of New York Mellon ( BK) and State Street ( STT), The Wall Street Journal reported. Speaking in Washington Tuesday morning, Paulson said he dislikes government ownership in U.S. financial firms but the equity investment will help unfreeze liquidity markets and alleviate the crisis. Paulson stressed that the capital infusions should be circulated rather than kept by banks. Federal Reserve Chairman Ben Bernanke praised Paulson's plan, and FDIC Chair Sheila Bair said that additional insurance of deposits in banks would also boost confidence in the financial system. Action in the money markets suggests the international relief effort may be gaining traction against the credit crunch. Bloomberg reported that three-month dollar Libor, a measure of the rate banks charge one another for large loans, declined 12 basis points to 4.64%. The overnight rate lost 29 basis points to 2.18%. "We don't want to sound too Pollyanna-ish, but it is clear from the events of the past week that the body politic of the developed economies has been shaken to the core and will now do whatever is necessary to maintain the operation of the system. The daily threat of institutional failure has, therefore, now receded greatly," wrote Ian Shepherdson, chief U.S. economist at High Frequency Economics, in an email.