Follow The Money: Was Part Of Bailout A "Bait And Switch?"
(CBS)
It took a full month for many in Congress and the American public to realize that billions in bailout funds were not going to be used the way they thought.
Instead of purchasing failed mortgage assets, the Treasury Department used the taxpayer money to buy preferred shares of stock in select banks. It was not only weak banks in need of assistance, but also banks supposedly deemed to be "strong" by federal regulators; the idea apparently to help shore up the economy by ensuring strong banks take over weaker ones (although nobody from the Treasury Department has responded to our repeated requests for information).
Sources tell CBS News the bank strategy was not discussed in advance with important members of Congress who were "sold" on the bailout. Sources also say the strategy was not mentioned to top members who spoke directly with Treasury Secretary Paulson. But in the first weeks of the bailout, select banks become in-the-know quickly. Several of them have said it was "federal regulators" who approached them and urged them to apply for bailout money ... even before the public or Congress were aware this would be its use ...
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