Ethics

Buying Troubled Bank Assets? Not So Much

By Ed Brayton

The more time passes, the worse this bailout looks. Now the administration is completely changing the entire rationale for why they demanded the money in the first place:

In a stunning turnabout, the Bush administration Wednesday abandoned the original centerpiece of its $700 billion effort to rescue the financial system and said it will not use the money to purchase troubled bank assets.

"Our assessment at this time is that this (the purchase of toxic assets) is not the most effective way to use funds," Treasury Secretary Henry Paulson told a news conference.

Paulson said the administration will continue to use $250 billion of the program to purchase stock in banks as a way to bolster their balance sheets and encourage them to resume more normal lending.

Full post as published by Dispatches from the Culture Wars on November 16, 2008 (boomark / email).