Secretary Henry Paulson. provided an update Wednesday on the financial rescue package authorisd by the Emergency Economic Stabilization Act (The $700bn Troubled Asset Relief Program). The announcement is available via webcast here.

The global financial sector’s total losses from the credit crisis are approaching $1,000bn after recent acceleration of the turmoil in the markets. In related news, US Treasury Secretary Henry Paulson on Wednesday, officially abandoned his original plan to buy toxic assets from financial institutions and said US consumer credit markets have effectively"ground to a halt."

Bloomberg says that writedowns by Fannie Mae, the US sponsored mortgage financier that was nationalised last summer and insurance giant AIG, which has been bailed out twice by the US government, have raised total losses reported by financial institutions since the beginning of 2007, to $918bn.

In October, the International Monetary Fund raised its estimate of the expected total losses in the financial sector to $1,450bn, from $945bn in April.

UK banks are "staring into the abyss" and European financial firms may need to raise €83 billion more capital as bad debts mount, analysts warned last week.

"Things are getting worse, faster than we thought,"Jonathan Pierce, analyst at Credit Suisse, said in a note on UK banks entitled "Staring into the abyss?"

That could put renewed strain on capital even after £44 billion has been raised in recent months, and leave Royal Bank of Scotland facing a loss this year and next, Pierce said.

Banks across Europe face a bleak outlook and could need to raise €83 billion and slash dividends, said Huw van Steenis, analyst at Morgan Stanley.

"Deleveraging, funding stresses, weaker macro and re-regulation make us think it's still too early to buy the banks sector," van Steenis said in a note. He cut 2009 earnings forecasts by more than 30% for many banks.

US consumer credit market at standstill

Treasury Secretary Henry Paulson, told a press conference on Wednesday that : "Although the financial system has stabilized, both banks and non-banks may well need more capital given their troubled asset holdings, projections for continued high rates of foreclosures and stagnant US and world economic conditions. Second, the important markets for securitizing credit outside of the banking system also need support. Approximately 40% of US 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. Addressing these two priorities will have powerful impacts on the overall financial system, the strength of our financial institutions and the availability of consumer credit. Third, we continue to explore ways to reduce the risk of foreclosure." Paulson's statement

There has been a drawdown of $350bn so far from the $700bn Troubled Asset Relief Program (TARP). Treasury has just $60 billion left from the initial allocation. It has to get authorisation from Congress for the next drawdown.

The market supporting consumer finance "is currently in distress, costs of funding have skyrocketed and new issue activity has come to a halt," Paulson said

Democrats in Congress are unhappy that Treasury isn't forcing banks to make loans with funds they receive from the government and there is also dissatisfaction that Paulson is reluctant to provide support to the embattled car industry.

Paulson said that Treasury hasn't figured out how to satisfy Congress's request that it use TARP to help distressed homeowners avoid foreclosure.

House Financial Services Chairman Barney Frank said Wednesday: "Using some of the TARP money to reduce foreclosures was not only contemplated in it, it was one of our major focal points."

In October, banks and other finance companies making loans for autos, credit cards and college tuition had virtually no success in selling those loans to other investors, a clear sign of  how tight credit markets remain.

The market for selling such loans — by packaging, or securitizing, them into bonds — had just one $500 million deal for all of October, according to Barclays Capital. That compares with $50.7 billion worth of deals made one year earlier, according to market-research firm Dealogic. The overall market for so-called asset-backed securitization is estimated at $2.5 trillion.