The news today is reporting that Treasury Secretary Paulson is changing the way that the $700B bailout money is going to be spent. He has already done this once in a big way when he used his first $250B to buy preferred shares in banks rather than to accumulate troubled mortgages. In fact, I can't recall the man ever saying the same thing twice, so today's change of plans is hardly news and should have been anticipated. Today he is shifting away from mortgages entirely and hopes to direct the rest of the bailout money to credit cards, student loans, and other areas where the financial industry has been taking loses.
To my knowledge, the Treasury Department has not acquired a single troubled mortgage, which was the original intent of the bill. Banks are now starting to modify mortgages as they would under a free market without any government assistance, on the principle that getting less money from a loan modification is better than getting even lesser money from a foreclosure, in the setting of declining house values.
Actually, recalling my review of the legislation there was hardly a mention of mortgages, so the program is going as written, if perhaps not as advertised.
ADDENDUM [2/7/09]: For a nice review of bailout history and a blistering commentary on Paulson check this out.