Do you have faith in Henry Paulson?

Henry Paulson became Treasury secretary 28 months ago, when he was at the top of the financial world: Wall Street's best-paid chief executive officer, capping his career with a high-profile sojourn in public service.

Today, two months before he leaves office, some say Paulson is a reduced figure, damaged by the financial-market meltdown that happened on his watch and by the government's struggles to respond to it.

Like many others who have served in President George W. Bush's administration -- among them former Secretary of State Colin Powell and former Treasury chief Paul O'Neill -- Paulson, 62, of Barrington Hills, will leave office casting a smaller shadow than when he arrived.

"Paulson's credibility has certainly been substantially diminished," said Peter Wallison, who was general counsel at the Treasury under former President Ronald Reagan and is now a fellow at the American Enterprise Institute in Washington. "There has been a

lot of shifting back and forth and he clearly hasn't thought through much of these policies. He has lost a lot of confidence from the market from all of this."

The latest blow was his Wednesday announcement that the Treasury is abandoning his plan to buy devalued mortgage assets -- the one he unveiled dramatically just eight weeks ago and defended against congressional and market skeptics.

"This is a flip-flop, but on the other hand, when they first proposed the thing, they didn't really know what they were doing," said Bill Fleckenstein, president of Fleckenstein Capital Inc. in Seattle and author of the book "Greenspan's Bubbles." Paulson has pushed some "cockamamie schemes," he said. "So one has to ask: 'Does he have any clue?'"

"He's ended up really in kind of a hair-on-fire thing," said Stephen Stanley, chief economist at RBS Greenwich Capital. "Particularly in his position, of somebody who was going to be a government official for a very short time and then ride off into the sunset, it's been very different from what he had in mind."

The Treasury chief Wednesday said he had no regrets over reversing his plans for the bailout program.

"I will never apologize for changing a strategy or an approach if the facts change," Paulson said at a press briefing in Washington.

When Paulson took office in July 2006, the Dow Jones industrial average was near a six-year high and Goldman was selling at $149 a share, making the former CEO's stake worth about $485 million. Today the Dow is down by more than a third for the year. Goldman, which weathered the crisis far better than Lehman Brothers Holdings Inc., Merrill Lynch & Co., and Bear Stearns Cos., trades more than 70 percent below its October 2007 peak of $250.70.

Paulson came into office determined to use his credibility and reputation to advance an agenda that included easing regulation of Wall Street -- citing concern that too-stringent oversight would drive investors to other markets like London and Hong Kong -- and an overhaul of Social Security to allow for taxpayer-funded private accounts.

But Bush's falling political fortunes -- anger over the botched response to Hurricane Katrina, voter weariness over the Iraq war, the Republicans' loss of congressional control --stymied much of that agenda. Then came the credit crisis of summer 2007 -- and the subsequent market and economic meltdown that have overtaken the Bush presidency.

Paulson's defenders say he's the victim of the worst financial crisis in seven decades, and has helped prevent a deeper collapse by using his knowledge and contacts on Wall Street.

Paulson proposed an unprecedented $700 billion package to purchase distressed mortgage assets, aiming to unfreeze credit markets hobbled by losses stemming from record foreclosures. The Dow soared 7.3 percent in two days as officials prepared their plan Sept. 18-19.

Paulson's star waned when he shifted the bailout program's focus in a matter of weeks.

At first, Paulson rebuffed calls from some lawmakers to buy stakes in financial companies as a more direct way of getting capital to lenders. He told lawmakers at a Sept. 23 Senate Banking Committee hearing "that's what you do when you have failures, you know?" Instead, it was better to rely on "market mechanisms," holding auctions for devalued assets, he said.

Less than a month after his initial plan, he agreed to use the first $250 billion of bailout funds for capital injections. And Wednesday he officially abandoned any intention of holding auctions for distressed investments.