President George W. Bush, Federal Reserve Chairman Ben Bernanke and Paulson initially told lawmakers the $700 billion was needed to buy troubled assets that banks were carrying on their books.
But last week, Paulson made it official: the government wouldn’t use any of the $700 billion to buy the toxic assets.
So far, the Treasury Department has pledged $250 billion for banks in return for partial ownership, a measure designed to encourage the institutions to boost lending and stabilize credit markets.
In addition, the administration has agreed to devote $40 billion to troubled insurer American International Group, leaving $60 billion available for additional bailout efforts through Jan. 20.
It’s sad that I was genuinely surprised to hear this news. How naive is that? Fool me once, shame on you. Fool me twice, shame on me.