In a striking admission, Paulson said that buying up distressed mortgage assets "is not the most effective way" to use government funding.Purchasing these so-called "toxic" assets was once the cornerstone of the rescue plan for financial markets and was almost the entire focus of Congress when the TARP package was being debated before its enactment in September. But almost as soon as Treasury received the money, it decided that giving capital to banks in return for preferred stock was a better use of the funds. Some analysts have accused Paulson of "flip-flopping" on every plan and it doesn't look like he has a plan at all.

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