US in turnaround on $700bn rescue package
US Treasury Secretary Henry Paulson backs away from buying toxic mortgage-related assets
In an alarming reversal, US Treasury
Secretary Henry Paulson has said the Bush administration would drop a plan to
buy up troubled mortgage-related securities, central to the $700bn financial
rescue package approved by Congress only last month.
He said the Bush administration planned instead to use the funds for other
purposes such as further efforts to open up the nation’s credit markets, the
Chicago Tribune reports.
Paulson also said the government’s financial rescue mission had entered a
‘time out’ period as Obama prepared to take office. During that period, Obama
and Congress must decide the role federal officials should play in the housing
market, Paulson said.
The turnaround is seen as a sign of how far US government officials were on
the backfoot when trying to tackle the mounting economic crisis. ‘You’ve had a
tremendous amount of improvisation here,’ said Douglas Elmendorf, a former
Federal Reserve economist and informal adviser to Obama’s transition team.
Further reading:
US Senate passes $700bn bailout Bill
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the Chicago-Tribune story