Grading Paulson's Bailout Plan
Treasury secretary's bailout change has many scratching their heads.
Nov. 13, 2008 — -- Treasury Secretary Henry Paulson makes no apologies for changing the focus of the $700 billion bailout bill.
On Wednesday Paulson said the government will abandon the initial strategy of buying up bad mortgages from banks and instead target consumers by purchasing vast amounts of stock in financial institutions. The hope is that consumers will have an easier time getting credit cards and auto loans from banks flush with cash.
Opinion was mixed on whether Paulson's move was sound. Many applauded the Treasury Department's willingness to adjust on the fly.
But some questioned whether the new course would boost anemic economic markets or squander taxpayer dollars.
"What they've been doing is shifting from one horse to the other one and to try to figure out what works and nobody's really clear what is going to work," said Steve Ellis, of Taxpayers for Common Sense.
Of the $350 billion that has been authorized by Congress to spend so far, only $60 billion is left.
With the remaining $350 billion still waiting to be authorized, that leaves $410 billion left, which some people think might not be enough.
"Seven-hundred billion [dollars] sounded like a lot when it started, but they've gone through a lot of it pretty fast," said Yale University economics professor John Geanakoplos.
Still, three financial experts gave Paulson's plan good marks. "Good Morning America" financial contributor Mellody Hobson and New York Times reporter Andrew Ross Sorkin gave the new plan an A, while Charles Schwab investment strategist Lizann Sonders gave the plan an A-minus.
"We're in uncharted waters and I think given that Paulson is the captain of the ship, it's important to be flexible. To dig your heels in when things are moving so rapidly and say, 'this is the plan,' I think you have to adapt to what is changing," Sonders said.
But Paulson fared worse when it came to how effectively the money was spent and whether it succeeded on preventing a total market meltdown. Hobson gave a C, while Sonders and Ross opted for a C-plus. "With room for improvement," Sorkin said.
"I think what happened here was it was misadvertised as a package. He didn't have the right idea of what he was trying to do, but more importantly, the public didn't either. This was a package that was aimed to try to keep the patient from dying, but it wasn't about rehabilitating the patient. And that's what we need to do now," Sorkin said.
Related Stories
ABC News Live