After the first 700 Billion dollar plan failed to pass a house vote on September 29 (which was quite a surprise at the time it happened, after all, those votes generally aren't taken unless the outcome has been brokered and counted ahead of time, so someone got cold feet at the last minute). A new bill that added "tax breaks and other sweeteners" did manage to pass in the Senate and then the house, to be signed by Dubya on October 3, 2008. Apparently a lot of discretion on how to hand out the actual funds was left though, because as of this writing, NONE of the funds were used to buy up any of the "troubled assets" aka "Toxic assets."

Treasure Secretary Paulson got authority to use 250 Billion to start, but decided that buying up the "Toxic Assets" was not the best way to use the ammunition he had been given. Instead, he apparently used the money to buy bank stock to get cash onto the banks balance sheets, so that the banks would start lending again.

Paulson did claim that the initial plan to purchase "toxic assets" which would in theory help out citizens that were in mortgage trouble had changed in light of "changing facts."
"I will never apologize for changing an approach or strategy when the facts change," he said.

Pasted from <http://cbs11tv.com/national/paulson.bailout.meltdown.2.862368.html>

This sort of statements is disturbing no matter how you slice it. Assuming that Paulson is being honest, it means that he really didn't know about the lending problems that were going on, or the difficulties inherent in trying to purchase the toxic assets. In other words, he really wasn't very competent about how to best use the funds. Of course, if he did understand that, and pretty much knew ahead of time that he would just have to give out giant piles of cash in a pseudo-nationalization effort, he was being crafty and manipulative and needed to get legislative "buy-in" by saying that he wasn't going to just help out the banks, but somehow help out that portion of the citizenry that was in peril of foreclosure. The fact that the bill did not specifically require the purchasing of "Toxic Assets" to my mind makes congress complicit, but I can see legitimately giving them a pass, since Congressmen aren't known to be economically literate. Still, they are supposedly legislatively literate, and it doesn't look like they put much in the way of oversight in the system.

This could start to look like a conspiracy, but that would imply that there was a group of people that knew enough about what was going on. I think that this was more a "conspiracy of like minded folk" to do what they felt was best for everybody, but of course, that would mean what was best for them to begin with.