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The Treasury Department is hoping that the third time's the charm in developing its plan to stabilize the financial markets. But the haphazard manner in which the program has been structured has left some wondering whether the folks in charge are equipped to handle the crisis.

A brief recap of the Troubled Asset Relief Program's demise: First, Treasury Secretary Henry Paulson suggested buying $700 billion worth of banks' troubled assets. His proposal to Congress was briefly sketched out on three sheets of paper, with few strings attached.

Perhaps unsurprisingly, lawmakers overhauled the plan in divisive sessions. The final draft included a stipulation allowing the government to obtain preferred stock in exchange for cash -- a measure that Paulson adamantly objected to, at first. But once Britain decided to inject capital into its financial system, the U.S. soon followed suit, while hatching a plan to purchase banks' troubled assets with remaining funds.

Less attention was given to asset purchases, as capital injections seemed to be a faster and more efficient way to help banks, protect taxpayers and spur lending. On Wednesday, Paulson officially scrapped the idea of buying

troubled assets

through TARP.

While the

Dow Jones Industrial Average

plunged more than 400 points after the decision Wednesday, experts say capital injections are a better method to repair the battered financial system. Some emphasize that it should have been the method from the start, and that the disorganized and indecisive manner in which the government proceeded has only fueled uncertainty.

"It does erode confidence," says Dan Seiver, a finance professor at San Diego State University. "I'm beginning to ask questions myself, as to whether our economic czars know what they're doing."

Alan Madian, a director with expertise in financial regulation at the consulting firm LECG, says scrapping TARP was "probably the smartest thing they ever did," but acknowledges that the back-and-forth about the government's strategy has fueled the "huge amount of uncertainty" in the market.

"The initial plan didn't make a lot of sense in terms of dealing with the problem that they had," says Madian. "It took them a little bit of time figuring out that it didn't make much sense, and they had some help from the Europeans."

Paulson explained the drastic change in strategy during a press conference on Wednesday by asserting that regulators were responding to changing circumstances. "I will never apologize for changing a strategy or an approach when the facts change," said Paulson. He added that an apology should "go the other way," for not responding to changing facts.

Steve Stanek, a research fellow at the Heartland Institute, said Paulson's assertion that the facts have changed "is a tacit admission that he did not know what would come next, and I'll bet he still does not know what will come next."

Indeed, while government initiatives to bail out or push acquisitions of financial powerhouses like

Bear Stearns

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Fannie Mae



Freddie Mac



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have saved the system from utter collapse, it is unclear how much additional support the sector will need, and what the ultimate cost to taxpayers will be.

The upfront cost of AIG's rescue alone has inflated to $150 billion from an initial $85 billion, and terms of the rescue have changed.

American Express

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Morgan Stanley

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Goldman Sachs

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have won federal approval to change into bank holding companies to tap into government funds. Then there is talk of adding

General Electric

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, or the Detroit automakers


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, to the plan as they burn through cash and warn of impending disaster.

Paulson also said on Wednesday that the administration is exploring other options for the unused bailout funds. One option is injecting more capital into banks, while requiring them to match public funds with private ones. Another is to use some portion of the money to further bolster efforts to help mortgage borrowers who are at risk of default.

One such approach favored by Federal Deposit Insurance Corp. Chairman Sheila Bair is to guarantee reworked mortgages to reduce monthly payments for borrowers, though Paulson did not say it would be adopted. Michal Ann Strahilevitz, an associate professor of marketing at Golden Gate University, says homeowners and taxpayers who need support don't have much faith in the system themselves.

"More and more Americans are losing their confidence in the 'expert' policy makers who are not only seen by the viewing public as partly responsible for the current economic crisis, but who are also seen as inept in their attempt at fixing the mess they helped create," Strahilevitz says in an email message. She added that "to restore confidence, there will need to be either far better communication from the policy makers to the public, or a clear change in who appears to be calling the shots."