Collage: Meutia Chaerani / Indradi Soemardjan and Shealah Craighead / White House
“I will never apologize for changing a strategy or an approach if the facts change,” explained Treasury Secretary Henry Paulson, who has retreated from his original plan of buying up near-worthless mortgage securities with taxpayer funds. Instead, Paulson will continue to pump money into troubled banks in exchange for equity, a scheme that has proved more expeditious and popular.
Paulson left himself some wiggle room, saying the Treasury Department might make “targeted” purchases, but for the most part the original plan is dead.
The Bush administration on Wednesday largely abandoned its plan to buy up toxic mortgage assets and said it will focus its $700 billion financial bailout fund on making direct investments in financial institutions and shoring up consumer credit markets.
The U.S. Treasury Department initially promoted the financial rescue package approved by Congress last month as a vehicle to buy illiquid mortgage assets from banks and other institutions to spur fresh lending.