The coverage of the news today that the government doesn't envision investing more than $30 billion in equity and financing for its once-hyped toxic asset purchase program struck me as part elegiac (poor PPIP, we hardly knew ye) and part mystified (all that build-up for this???). Here's the lede to the Times piece, for example:

For nearly a year, the question has vexed Washington and Wall Street: What do we do with all these impaired mortgage investments?

The answer still, it seems, is wait and hope.

After months of back-and-forth with the banking industry, the Obama administration on Wednesday unveiled a scaled-down version of its plan to buy troubled mortgage-related securities. The decision represents a huge gamble that banks have recovered sufficiently to help pull the economy out of recession.

But, all in all, I actually think it's a good thing that PPIP is moving forward in limited form. For one thing, it's really difficult to get a program like this up and running quickly. As former Treasury official Phillip Swagel writes in his account of the financial crisis from the Bush-administration vantage point, the process, which Hank Paulson seriously considered undertaking, can take months if not years:

Another factor in the decision to cancel the reverse auctions [for toxic asset purchases] was simply time: the first reverse auction to buy mortgage-backed securities might have taken place in early December but would have been small—perhaps a few hundred million—while we became comfortable with the systems. The auctions would have ramped up in size, but still would likely have remained at $5 or 10 billion dollars per month, meaning that it could take two or more years to deploy the TARP resources in this way.

Which is to say, the exact wrong time to be launching something like this is when you most need it.

Which brings me to the second point: Ask any Treasury official their view of where we are in fixing the financial system, and they will tell you we're not close to being out of the woods. (They'd obviously love for the opposite to be true, but they have no illusions about it.) Given that, it makes a lot of sense to have a program in place that can be ramped up if/when needed.  

--Noam Scheiber