Virtually nothing about the government's plan to bail out beleaguered financial institutions is appealing. But a change in the initial strategy, as outlined last week by Treasury Secretary Henry Paulson, takes some of it from bad to worse.
At first, the plan had been to use a substantial portion of the $700 billion approved by Congress to buy "toxic mortgages" from financial institutions.
But as Paulson explained in a speech, that has changed. Now, officials have decided that most of the money should go directly to banks. In return, the government would receive shares of preferred stock in the banks.
As we already have pointed out, that gives government stakes in what had been private financial institutions. It is a type of socialism, giving Washington a measure of control over the private sector.
On a philosophical basis, that isn't good. But practically speaking, the ramifications are worrisome. The same government that imposed rules contributing to the financial meltdown now will have even more power to affect banking decisions.
And money provided to banks may not ease the economy's woes. As we also have pointed out, some banks are using it to acquire other institutions, not to shore up their own finances. None of this bodes well for the future of the economy.