WASHINGTON - One of the key parts of the government's financial rescue plan-buying troubled assets of financial institutions--has been put on hold, Treasury Secretary Henry Paulson said today.
"Our assessment at this time is that this is not the most effective way to use TARP funds, but we will continue to examine whether targeted forms of asset purchases can play a useful role, relative to other potential uses of TARP resources," he said in Washington.
The prospect of the government purchasing bad mortgages was a key selling point among skeptical lawmakers during the congressional fight over the $700 billion plan in September and October.
CUNA and NAFCU have been working since the law took effect last month to ensure that credit unions would have access to the program, though officials of both groups said they did not expect many credit unions to avail themselves of it.
The majority of TARP funds used so far have gone for government purchases of preferred stock in banks, with the hope that they will use the money to make more loans.
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