Treasury Secretary Henry Paulson on Wednesday announced that TARP, shorthand for Troubled Asset Relief Program, would no longer have anything to do with troubled assets.

Better known as the $700 billion government bailout package, TARP, or at least the funds that have been allocated for it by Congress thus far, will now be directed at--ahem--bailouts. Any purchase of mortgage related securities that caused the financial meltdown and still sit nearly worthless on the balance sheets of shaky financial institutions, has been put on hold.

Said Paulson, "It was clear to me by the time the bill was signed on October 3rd that we needed to act quickly and forcefully, and that purchasing troubled assets--our initial focus--would take time to implement and would not be sufficient given the severity of the problem. In consultation with the Federal Reserve, I determined that the most timely, effective step to improve credit market conditions was to strengthen bank balance sheets quickly through direct purchases of equity in banks."

Paulson said TARP would continue to inject capital into banks, start injecting capital into non-banks that are saddled with sinking credit card and auto loan paper and continue to look for ways to reduce the risk of foreclosure.

The first question is: If he knew this on Oct. 3, why did he wait until now to announce it?

The second is: What does this really mean?

A possible answer to question one: There was an election in the way.

A possible answer to the second is: The financial crisis is now spinning out of control. Hint: Nothing the Fed or Treasury has done so far has stabilized the credit markets. Builders know this, but the rest of corporate America is learning it as well.

A key statement by Paulson was that "the important markets for securitizing credit outside of the banking system also need support. Approximately 40% of U.S. consumer credit is provided through securitization of credit card receivables, auto loans and student loans and similar products. This market, which is vital for lending and growth, has for all practical purposes ground to a halt."

Read: Now, plain vanilla insurance companies and pension funds and other non-banks are teetering. Then there are the auto makers, AIG and maybe even General Electric, all of which are looking to the government for money.

Paulson said a plan was under review to allow the Fed to lend TARP funds directly to some of these non-bank institutions. His posture was to free up credit for consumers, but more likely he was talking about saving these institutions, and the jobs they provide, from implosion. He just couldn't say that. Making more credit available to deadbeats who have already defaulted is a plainly stupid idea to which Paulson is not routinely given to having. And he has to know that all responsible people who are paying their debts need is an end to the freefall in the value of their assets, led of course by their homes.

For the home building business, there may be a potential upside to this. By taking TARP off mortgage-backed securities, Treasury may be betting that a market-based solution may be in the cards. If Congress were to listen to the Fix Housing First Coalition and pass direct housing stimulus, those securities might find a market, and a floor, as home prices stabilize. Perhaps Paulson & Co. have placed a bet on just that.

So far, nothing else has worked.

If not, can anyone say, "chicken in every pot?" Or "new deal?" Or "good morning, comrade"? Better get some practice, just in case.