Wall Street demands free hand with funding from US Treasury

The change is driven in part by the rapid deterioration of global financial markets, which makes the bailout as initially proposed by Paulsona complicated process in which banks will offer their toxic securities for purchase by the Treasury in reverse auctionsfar too slow to funnel vast amounts of cash into the financial system.

There was a widespread clamor in the financial press insisting that the bailout proposed by British Prime Minister Gordon Brown was more effective and faster than the Paulson plan. Brown said that his plan to inject capital directly into major British banks would start delivering hundreds of billions in public funds as early as Monday.

In an additional effort to speed up the bailout, Paulson directed Fannie Mae and Freddie Mac, the government-chartered mortgage giants that were taken over by federal authorities last month, to begin immediate purchases of mortgage-backed securities using the $100 billion apiece appropriated by Congress in Julya sum on top of the $700 billion authorized in the bank bailout legislation passed by Congress October 3.

There was also concern that the overall size of the bailout was now inadequate for the scale of the catastrophe, following the worst week on global stock markets in history. According to a report in the New York Times Sunday, Treasury Secretary Henry M. Paulson Jr. has refused to say whether the capital infusion program for banks would be bigger than the original plan to buy troubled assets.

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