However, as a Money Morning investigative story revealed on Friday, much of that money is being used to finance takeovers of weaker banks, enabling big banks to get bigger, using taxpayer money to do so. [Editor’s Note: For a full report on this taxpayer-financed takeover binge – including which banks may be next on suitors’ shopping lists – check out this Money Morning investigative report, which includes commentary by Takeover Trader Editor Louis Basenese. This report is free of charge.]

Housing and Auto Woes

Of the remaining $450 billion, the government is looking to allocate between $40 billion and $50 billion to a tentative Bush Administration plan aimed at keeping as many as 3 million homeowners who are behind on their mortgages from losing their houses. Under that plan, which has been delayed by a series of legal snags and internal political debates, the money would be used to cover future losses on loans that are deemed eligible for federal support.

As currently conceived, the federal government would incur half the loss on a home loan if the mortgage company that controls the loan agrees to lower the borrower’s monthly payment for at least five years. On any given loan, the mortgage company would reduce the payment borne by the homeowner by writing off part of the loan balance, reducing the loan’s interest rate or changing other loan terms, sources told The New York Times.

While the Treasury Department is game to help U.S. homeowners, it’s been reluctant to extend direct support to U.S.