Government to pass on buying troubled securities

Not to gloat, but I have been suggesting for a while that the government might not go forward with its plans to buy up troubled securities--originally the centerpiece of bailout ambitions. The valuation issues were just too tricky. Now comes word that Henry Paulson has announced that the Treasury will, indeed, give up on those early plans, something I regard as a good move. The markets, however, didn't agree, at least initially. The only issue is that the bailout package was essentially sold to Congress and the public on the merits of such purchases. Obviously, the bailout efforts give Treasury some leeway; it made the right decision--this time. Meanwhile, Treasury is aiming to support various consumer credit markets, such as credit cards and auto loans. The issue is, how, if it's not going to buy such assets specifically? Interestingly, all this can be seen as tacit acknowledgment that the government could not prod banks to boost lending.

For more:
- here's an AP article
- here's more on the new direction from the New York Times

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