I've never run an investment bank, but obviously I'm a whole lot smarter than former Goldman Sachs CEO Hank Paulson, because I figured this out as soon as he proposed it. So can I be the Treasury Secretary now?

A change in plans

Treasury Secretary Henry M. Paulson Jr. confirmed Wednesday what was already becoming apparent -- that the government will not use any of its $700 billion financial-industry bailout fund to buy toxic assets from banks and other institutions.

Those purchases were the basis of the Troubled Asset Relief Program that Congress approved last month. The argument was that removing distressed assets such as mortgage-backed securities from the books of those companies would ease fears about their solvency, free up capital, encourage lending between companies and thaw a frozen credit market.

But in a quick turnabout, the Treasury Department has decided that making direct capital investments in banks is a better way to stimulate lending.

Of course what really matters are the terms of those investments. Warren Buffet demands high returns on his investments, while Hank Paulsen is giving our hard-earned tax dollars away for practically nothing.

Kos writes:

this $700B, originally designed for purchasing distressed assets, is now a $700B slush fund for Bush and Paulson to do with whatever they please.

I can't decide which is worse.

The great irony is that Paulson's "September Surprise" cost John McCain the election by exposing him as nothing more than a drama queen. When he "suspended" his campaign to "solve" the crisis - and nuked the big White House meeting - he fell 6% behind in the polls and never recovered.