The Dow surged a whopping 497 points yesterday, which isn’t just the biggest point gain this year: it's the fifth biggest single day point gain ever. Investors were all aflutter over the Administration's new plan to start buying up toxic assets from banks. The past few months we have been awash in big government plans - the bank bailout plan, the housing plan, the stimulus plan - so why is this one such a big deal?

Because it's primary goal is to free up credit - the lifeblood of the U.S. economy. Restoring credit means that businesses could again get loans to cover costs, like paying employees and expanding operations, and you and I could start getting loans to buy houses, cars, and education.

So how exactly is this plan going to do that? To me, it's easiest to think about it like a garage sale.

Toxic assets are like all the old junk the person having the garage sale wants to get rid of - old socks, broken bikes, a beat-up dresser. Up until now, the socks and bikes and dresser have been cluttering up the garage and making doing other things difficult, just like the toxic assets, by weighing down the banks' balance sheets, have been preventing them from making loans and doing the things banks do. Besides, the person having the garage sale - the banks - need the cash.

But who is going to buy a beat-up dresser? Someone who sees value in it - who understands that even if the dresser doesn’t look great now, touch it up with some varnish and the old thing can be sold for twice the profit at an antique store.

This new government plan is basically creating that potential buyer. the government, partnered with private investors, is going to buy up the banks' toxic assets (the old dresser) and sit on them in the hopes that, given time, they have real value. Then, sometime in the future, the government and private investors can head over to the antique shop and sell, sell, sell for considerable profits.

At least that’s the hope. Some critics say the toxic assets - loans on houses and securities tied to those loans - actually are almost worthless, and will stay that way. It's a big risk to take, to be sure. Even so, having these assets out of the banks' garages should vastly improve the banks' ability to lend, and that is a very good thing for everybody.

Ali Velshi is CNN’s Chief Business Correspondent and the author of "Gimme My Money Back: Your Guide Through the Financial Crisis." You can follow Ali on Twitter @alivelshi.

Ever since the government started doling out money to our nation's financial institutions, critics have been up in arms, saying that rescuing banks that made bad bets encourages irresponsible behavior. And the proponents' self-justifying rally cry of "too big to fail" was little reassurance for most wary Americans.

Nevertheless, billions of dollars were indeed loaned and used to buy stakes in banks. However, now the government is being asked for even more money to help save America's banks, which again begs the question, is it worth it? Why not just let the banks fail?

Let's take a look at how letting big banks fail would affect you, the average American.

1) To begin with, if one major bank - let's say, for the sake of argument, Citigroup - were allowed to fail, it would affect far more people than just Citi's investors. Indeed, people the country over - even people investing and depositing in completely safe and solvent banks - would be too spooked to continue their investing and depositing as if everything were normal.

2) In fact, in most cases, they would start to pull their money OUT of the banks. Think of the scene in "It's a Wonderful Life" where the townspeople run on the Bailey Savings and Loan. Now think of that times about 400,000: that's America if one big bank goes under.

3) And what happens to the banks when no one is investing and no one is depositing? They aren't able to make loans, which pay for your small businesses, your cars, your homes, your son's college education.

Credit is the lifeblood of our economy. That means that if there is no credit, there is no economic recovery. Now I'll grant you bailout naysayers, there is no quick fix to this nation's current economic problems. But that is no reason to create even bigger ones.

Ali Velshi is CNN's chief business correspondent

Remember when you were a kid walking through the toy store and you spotted a toy you just had to have? And you felt the aching desire to immediately possess that exact G.I. Joe soldier or souped-up Barbie Dream Car?

Well, as you all know, I’m still a kid at heart, but instead of toys, these days I'm into more grown-up, traveling-news-correspondent-friendly items, like luggage. (That's a sad revelation, maybe, but true.)

For a long time, my bag of choice was a small Briggs and Riley case that had just enough room to hold everything I needed - my chargers, laptops, iPod, Kindle, makeup, toiletries, passport, pens, and a notepad - and still fit under the seat of the smallest commuter jet. It was almost perfect - except I had no room to carry a book, newspaper, or my personal camera. I needed a new bag.

And the one that caught my eye after many months of searching was a beauty made by Tumi. It was good-looking, compact, functional - the dream bag. But I didn’t buy it. I thought the Tumi was way too expensive (and this was pre-recession!). Instead, I trekked over to Target and bought a similar bag for about one-tenth of the price.

And even though the Target bag did the job just fine, my Tumi treasure-bag stayed with me. When I passed by the Tumi store, which is too-conveniently located just downstairs from the CNN studios in New York, I would look longingly in the window, imagining myself at a JFK gate, laughing merrily, holding a piping-hot coffee in one hand and my perfect Tumi bag in the other - the envy of all the other passengers. Then I would look down at the bag I actually bought, and sigh...

Well I must have dropped enough hints, because eventually my best friend bought me a bag from Tumi.com. Unfortunately, it wasn’t the exact model I wanted. So, receipt in hand, I headed to the Tumi store to exchange the bag for the one I wanted, which, as it turned out, was $100 cheaper. The person at the store offered me store credit, but I wanted the $100 to be refunded to my best friend's credit card (I’m a really great friend.) The Tumi guy said it wasn’t possible. To get a refund, my friend would have to send the bag back to Tumi.com and pay for shipping.

That's a bad policy at any time, but especially in a recession. And, with companies looking to cut costs in any way they can, my bet is that many are thinking that customer service is expendable. Well it's too bad: I really liked Tumi and their products, but I find the idea that I have to spend someone else's cash just because they bought me the wrong gift indefensible.

Now all of you readers have had some notable customer service interaction I am sure - whether good or bad - and I'd like to hear about them. E-mail me your customer service stories at ali@cnn.com so we can reward the good companies and reprimand the bad.

Oh, and to be fair, below is the response I got from Tumi. My friend still hasn't gotten her $100 back:

"Thank you for bringing this to our attention. Please see our response below.

Tumi is committed to providing our customers with superior product, exceptional service and a unique brand experience.

We are continually looking to upgrade our systems and policies in order to achieve this goal. Given the nature of our company owned vs partnered stores and our e.commerce relationship with our web provider, all of our systems are not currently aligned to allow for a seamless transaction/return exchange at the point of sale.

We are currently assessing and upgrading our limitations in order to accomplish this goal, and apologize that we are not in a position today to rectify your situation.

We will, however, do whatever we can to make sure your TUMI experience is superior. Please let us know what you would like to satisfy your need."

My response to Tumi is that I don't want special favors. I'll stick with the credit, but I hope they'll change their policy willingly.

Ali Velshi is CNN's chief business correspondent

On Wednesday, President Obama unveiled his administration's $75 billion plan to stem the growing tide of foreclosures in America. The plan aims to help up to nine million Americans who are struggling to meet their monthly mortgage payments even while their home values plummet.

The Bush administration drew criticism for relying on lenders and servicers to voluntarily modify the terms of troubled mortgages… a tactic with less-than-stellar results.

Obama has taken a broader approach to the foreclosure problem, looking to help not only those who are defaulting on payments, but also those who are at risk of falling behind in the near future. Let's take a look at some of the specific most interesting measures in the plan designed to tackle this overwhelming problem.

1) The plan includes billions of dollars of incentives for servicers to modify their loans.One important point here, the changing of loan terms is still voluntary for servicers. Even so, the incentives are designed to be too good to pass up: for each modification, the servicers receive $1,000, plus another $1,000 per  year for three years if the borrower stays current. On top of that, the government will give $500 to servicers and $1,500 for mortgage holders if they modify at-risk loans before the borrower falls behind.

2) The plan aims to help homeowners who owe more than their houses are worth. That's a state known as "underwater." And right now, a lot of homeowners are drowning. According to Zillow.com, home prices have fallen 17.5 percent nationwide, back to levels of the fall of 2004. The plan is to assist borrowers who owe more than 80 percent of their home's value to refinance and reduce their monthly payment and the new mortgage cannot be more than 105 percent of the current market value of the home. So you may still be underwater… but you’ll be a heck of a lot closer to the surface.

3) Obama plans to work with Congress to change bankruptcy laws to allow judges to modify mortgages during bankruptcy.Judges could then reduce the loan balance, which would decrease the value of the mortgage. That scares investors and servicers, and would encourage them to modify mortgages themselves before they ended up in bankruptcy court.

These are just a few of the major provisions in President Obama's very complex plan. In the end, the administration is hoping to bring payments down to 31 percent of a borrower's income, which is considered the threshold of affordability. It's an ambitious goal given how deep in the hole many borrowers now are. Plus, most indicators say the housing market is going to be bad for a while: housing starts and applications for building permits - a good indicator of future construction activities - both hit all time lows in January.

Ali Velshi is CNN's chief business correspondent

For better or for worse, the biggest economic stimulus bill in history - ringing in at a whopping $787 billion - has been passed. The bill is a hodgepodge of government spending, long-term investment, and tax breaks that Congress hopes will get the economy back on track.

Supporters say the bill's provisions will kick-start the job market, push stock prices higher, and restore confidence in the housing market.  Some 3.6  million people have already lost their jobs during this recession, consumer and business spending have just about ground to a halt, and housing prices continue to drop. The stimulus bill has its work cut out for it.

And as you might guess, the critics are many. The stimulus passed through the Senate with only three Republicans voting in favor of it; in the House, not a single Republican voted "yes."

Dissenters say that the stimulus will bury the U.S. further in debt and give the government too much control of the private sector. They warn, ominously, of  "nationalizing the banks."

Plus, even those who support the bill fear that redirecting so much money to the economic recovery will impede President Obama's ability to fulfill many of his campaign promises, like reforming healthcare or launching green energy initiatives.

Nobody is arguing that the bill is perfect, but in the end, it all boils down to how we, as consumers, feel. If we choose to trust the bill and get out and spend, businesses will take the hint and step up production and hiring. But, if we choose to continue scrimping and saving (because we didn't scrimp and save BEFORE this recession started), then things might continue as they are.

So what WILL you do? Hear the options on the "CNN Money Summit," Tuesday, February 17, at 11 p.m.  ET, and Friday February 20 at 11 p.m. ET

People are saving their money again. So much so, in fact, that economists are starting to get worried for the health of the economy. Now that's pretty funny because, not long ago - and I'm talking within a year here - many economists were actually concerned that Americans were spending too much and saving way too little. Oh how a recession changes things…

Let's take a look at how Americans have changed their savings patterns, and why that might be cause for alarm.

1) U.S. savings rate has risen from just 0.8 percent last August to 3.6 percent in December. Now if the amount people earn was rising steadily, this drastic increase in savings wouldn’t be cause for concern. But in the past 6 months, the average American income has been steady, if not a little lower. So where are people getting the money to save? By cutting their spending. And such a big decrease in spending over such a small period of time could spell disaster for retailers… who happen to employ a huge segment of the population.

2) People are saving more because of unrest in the economy. Before the economy started really heading into a tailspin, people were out spending. A lot. In fact, the savings rate was at historic lows, averaging 0.5 percent from the beginning of 2005 to April 2008. Sometimes the savings rate even dipped below zero percent, meaning that people were spending their savings or buying on credit. But once the housing market and stock market bubbles burst, consumers got scared about their job security and the availability of credit. (Which is to say, it's not available.)

3) A high savings rate is not necessarily a bad thing for the economy, but it is when the savings rate rises so drastically and banks don't keep up the pace making loans. By historical standards, our current rate of savings is not that big of deal. From the mid-1950s to the mid-1980s, the savings rate was much higher: from eight percent to 11 percent. The problem is how quickly Americans have changed their attitudes. In the 1950s through the 1980s, banks would usually take the money people saved and dole it out as loans for small businesses and to people looking to buy houses, cars, or education. That investment spurred further economic growth. Nowadays, though, banks are scared to make those loans. So as a result, the money people are saving is sitting in a vault, hoarded because banks executives don't trust that people seeking a loan can pay it back.

The combination of fewer bank loans and increased savings is strangling businesses: they can't get the loans they need to cover costs, and they're not getting money from consumers either. That leads to store closures and layoffs, as businesses have to cut costs just to stay afloat, which in turn leads to even less spending. Such a self-reinforcing cycle is exactly NOT what we need in the middle of a recession.

So what's the solution? That, my friends, is what all the hubbub in Washington is about.

Ali Velshi is CNN’s Chief Business Correspondent.

When Congress approved the $700 billion Troubled Asset Relief Program last October (TARP - popularly known as the "financial bailout"), it immediately released $350 billion to the executive branch, but included a clause that the president would have to come back to Congress in order to seek access to the rest of the money.

Now that half of the bailout funds have been doled out, there is plenty of criticism of how the Treasury has been spending.

As the name of the legislation implies, the TARP funds were originally intended to be used by the Treasury to buy up toxic assets - including mortgage-backed securities, credit default swaps and other complicated derivative securities tied to the housing market - from struggling financial institutions to help clear up their balance sheets.

In the end, though, most of the money was used by the government to buy equity stakes in those firms; and, some of that money actually ended up in the hands of Detroit's automakers - a sector for which the funds were never intended.

Now that Congress is looking at how the second $350 billion will be spent, lawmakers are taking their cues from their constituents fed up with the opaque way the banks and other firms have used the first $350 billion. Take a look:

1) 62 percent of Americans say Congress should block the remaining bailout funds until the incoming Obama administration provides more details on how that money will be spent. The poll, conducted by the Gallup organization, suggests that a majority of Americans don't completely trust the Treasury to act independently with such a large amount of money.

2) Americans from all political walks share concerns on where and how the rescue money is being spent. The Gallup poll found sentiment among Republicans, Democrats, and Independents is pretty consistent on this issue.

3) Congressman Barney Frank has just introduced a so-called "trust and verify" bill, which would place tighter restrictions on how the remaining $350 billion can be spent. Frank, the House Financial Services Committee Chairman and Democrat from Massachusetts, is seeking to include measures to increase oversight in the proposed bill, and ways to steer funds to help Americans facing foreclosure.

It's a complicated predicament. On one hand, the Treasury needs some wiggle-room to work effectively in changing circumstances, especially given the unpredictable nature of the current financial meltdown. On the other hand, legislators need to know what they are approving and maintain its check on the executive branch.

At the very least, it's clear from the Gallup poll that people across the political spectrum are in favor of more oversight on the remaining $350 billion of the bailout money. In other words, Americans want to know what’s going on underneath that TARP!

Ali Velshi is CNN’s chief business correspondent.