So much for buying those troubled assets

"I don't know that I've ever seen a case where criticisms from outside government (and probably a lot of nudging from the Federal Reserve) have caused such a quick U-turn in a major government policy."

Look at this way - at least it's better than Paulson telling us that we need to 'stay the course' and 'surge' the financial assets in 3 years.

Paulson is a Bush hire - and we are seeing more nationalization of the financial sector.. and who was screaming 'Socialism, Socialism' at Obama????

So Paulson's U-turn was changing from the auction process to direct buying? Doesn't seem like much of a change to me. The taxpayers are still taking the "troubled" (euphemism alert) assets onto their books.

I was encouraged by Paulson' move in favor of the equity infusions, but now it sounds like he's going back to the original plan.

Moderation is simply censorship by another name.

This is almost good news. If we would have told the banks, we'll giev you capital for warrants and ownership, but as far as the bad assets, you're on your own those non-performing and under-performing mortages would be history by now. Banks, instead, are acting as if they have all of the time in the world and Superman will be coming shortly to rescue them from themselves. What that has done is drag out the process by which we have revalued assets which are overvalued and created a disincentive for buyers to buy and banks to sell. I'm starting to think our money guys in the Fed. Gov. really have absolutely no clue.

WHERE HAVE ALL THE BAILOUT Dollars GONE?
(Where Have All the Flowers Gone-Pete Seeger)
WilliamBanzai7

Where have all the bailout dollars gone?
Long time passing
Where have all the bailout dollars gone?
Long time ago
Where have all bailout dollars gone?
Greedy bankers and AIG Sponge Bobs have picked them every one
When will we ever learn?
When will we ever learn?

Where have all the hedge funds gone?
Long time passing
Where have all the hedge funds gone?
Long time ago
Where have all the hedge funds gone?
Exploded every one
When will they ever learn?
When will they ever learn?

Where have all the investment bankers gone?
Long time passing
Where have all the investment bankers gone?
Long time ago
Where have all the investment bankers gone?
Gone and laid off every one
When will they ever learn?
When will they ever learn?

Where have all the investors gone?
Long time passing
Where have all the investors gone?
Long time ago
Where have all the investors gone?
Fled to cash every one
When will they ever learn?
When will they ever learn?

Where have all the trading profits gone?
Long time passing
Where have all the trading profits gone?
Long time ago
Where have all the trading profits gone?
Covered with toxic mark downs every one
When will we ever learn?
When will we ever learn?

"Now I'm not sure that the current buy-stakes-in-every-last-financial-institution-that-asks is really the right approach either. But at least Paulson has set an encouraging precedent: When the facts change, he changes his mind."

I haven't agreed with his positions, but I don't envy him his position. I've had to make huge compromises with my own beliefs to try and understand this mess and how it should best play out, but I don't matter.

My understanding was simply that going in with a Swedish type plan right from the beginning was a better way of biting the bullet, and eventually getting back out. It was cleaner. Maybe he's seeing that, especially since he's finding that, as the WSJ says, jawboning doesn't do much.

I'm not happy with the expansion of TARP recipients, but, again, where you have a messy plan with lots of lobbying, this was expected.

I'd like to hear his positions on all this when he's out of it. But you're right. I've had enough of government officials with no learning curve. He might end up being one of the better people in the administration in the last eight years. Of course, that's even fainter praise.

@don

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"But at least Paulson has set an encouraging precedent: When the facts change, he changes his mind."

Aha! Another closet Keynesian gets outed.