US Treasury Secretary Hank Paulson has committed a dramatic volte face from the Bush administration’s Wall St bailout plan to purchase toxic subprime mortgages from financial firms.

Mr Paulson announced he is refocusing on shoring up financial institutions with direct investments, shoring up markets for securitized consumer debt such as car loans, student loans and credit cards, as well as prodding banks to speed up the thaw in the country’s credit system.