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New direction for rescue plan

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The Bush administration today announced a change of course in its implementation of the $700 billion Troubled Asset Relief Program, with most of the initial $350 billion authorization now earmarked to buy preferred stock in banks rather than mortgage-backed securities and whole mortgage loans.The new direction -- part of a global response to the credit crisis that officials said was necessitated by the continued reluctance of banks to loan each other money -- is intended to restore lending by recapitalizing banks.Investing directly in banks instead of buying up their troubled assets will allow for a faster deployment of money the U.S. Treasury Department was authorized to borrow under the rescue package approved by Congress and signed into law by President Bush Oct. 3.That could help ease fears banks have had in recent weeks about lending money to each other, which has pushed up short-term interest rates that are tied to adjustable-rate mortgages. Most subprime and alt-A adjustable-rat...