The trouble with the Paulson plan: Who gets saved?

Years from now, analysts may look back on the actions of Henry Paulson, Ben Bernanke, and their colleagues and say that they saved the economy from an unimaginable fate.

Or, that may not happen at all. The plan to buy toxic assets from banks and put them into a government fund could be damaged by change forced on it by Congress. The debate could delay the help for weeks.

The plan may also be deeply flawed.

There are several potential issues that could make the medicine worse than the disease. One question is: Who gets saved? Banks? Small-town banks? Brokerage firms? Credit unions? College endowments? Hedge funds?

Congress may not like the idea of saving hedge funds where some managers make hundreds of million of dollars. But, if those funds cannot rid themselves of their troubled paper, they may be forced to sell tens of billions in other asset to stay in business. Another round of panic selling could be an unintended consequence of Paulson's program.

If the government miscalculates who should be thrown a life line, the mess could return.

Douglas A. McIntyre is an editor at 247wallst.com.