While foreign financial companies with subsidiaries in the US may employ Americans and may have troubled mortgage paper, Paulson's inclusion of firms headquartered overseas is certain to make his legislation almost impossible to pass.

Many members of Congress will respond to the inclusion of foreign banks in the bail-out with a visceral reaction based on their belief that homeowner interests should be put before those of overseas lobbyists. This position is nothing more than a trap for the feeble-minded. The buying up of toxic assets has very little to do with saving people with troubled mortgages.

However, mortgage-backed securities pose trouble to the US credit system no matter what the provenance of their holders may be. A systematic sweeping up of the garbage will have to be blind to whom the owners are, as long as the asset sits in America's capital markets.

It must have dawned on Paulson late that he had left something behind when he went up to Capitol Hill to make his sale. When he tried to correct this mistake, he undermined the power of his original argument which was to save the US credit markets . His revision may be correct but it is fatally ill-timed.