U.S. backs away from plan to buy bad assets

Politics: At least one piece of good news though I have a feeling this is going to be done in a back hand sort of way.

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. However, that plan never got off the ground and U.S. Treasury Secretary Henry Paulson told a news conference asset purchases were not the most effective use of the funds. "This is not going to be the focus," he said. Paulson added, however, that the Treasury would continue to examine the usefulness of "targeted" purchases. Treasury has already tapped the fund to inject capital into banks and ailing insurer American International Group. Paulson said he was considering a second round of preferred share purchases in both banks and non-bank institutions which, in a fresh twist, would match privately raised funds.

That is going to be the credit cards and other financial businesses, so money in the left hand goes to the right and we still bailing out everyone who whines.