The new bad asset buyout, credit market rescue program is analyzed in today's NY Times. For those of you who tire of Wonks Anonymous prose here is the gist of the story:

But none of the government’s moves alters some unfortunate facts. Lenders want better credit scores from consumers in every category. At the same time, millions of people are much less creditworthy than they used to be, because of the damage they have done to their credit scores through late or missed payments.

Lenders themselves have contributed to the downturn in creditworthiness by lowering the credit limits on huge numbers of customers’ credit cards. This has the effect of raising the percentage of available credit that a consumer is using, which usually causes their credit scores to fall.

Clearly, the banks do not have the confidence in how consumers will handle credit that they might have had six months ago. It is not clear whether a new source of funds will cure this skittishness.

Nor is it certain how much untapped desire to borrow exists. The fact that consumer spending fell an entire percentage point last month, as the Commerce Department reported Wednesday, may reflect something other than a lack of capital.

“If consumers are afraid to make purchases, it doesn’t really matter how much available credit you have,” said Mr. Papadimitriou of Evolution Finance.

As Wonks Anonymous noted in a previous post this looks like a quantitative easing - In other words the Fed is printing money and giving it out for free, to banks. It looks as if they hope that this will eventually trickle down to ordinary folks except that it won't.

We coiuld try delivering the money direct to the consumer. We already tried mailing out stimulus checks to everyone in the country. We might try again with bigger checks or we might just start a jobs program right now.