After a bruising battle to get it through a doubting Congress, the Bush administration’s $700 billion Wall Street rescue plan to purchase distressed mortgages and other bad assets has morphed into something else entirely.

Today, the Emergency Economic Stabilization Plan, signed by President Bush on Oct. 3, involves the government taking direct equity stakes in banks, and at least one bank used the money to buy a rival. The taxpayer money is also expected to buy stakes in life insurance companies, and may soon even go to help two struggling Detroit automakers merge.

In short, what once was disparagingly referred to as bailout for Wall Street now looks like a broader bailout of all sorts of troubled businesses. Some lawmakers and outside analysts question whether that’s serving the public interest as intended – or whether it’s becoming a taxpayer-financed giveaway to favored firms.

“I could say I told you so,” said Rep. Joe Barton, R-Texas, who helped lead a revolt against GOP leaders and sunk the $700 billion plan on its first pass. “It was so open-ended and we put so little accountability into it, they can basically do whatever they want to with the money.”

Lawmakers in both parties worried when the Treasury Department announced on Oct. 14 that $250 billion of the $700 billion plan would be used to inject cash directly into troubled banks. That pushed Treasury’s previous emphasis on purchasing troubled mortgage assets to the back burner.

Some $125 billion was used to take equity stakes in the nine largest U.S. banks, and now lenders across the nation can ask, through Nov. 14, for more. At least a dozen other banks have done so.

Massachusetts Rep. Barney Frank, the House Financial Services Committee chairman, who shepherded the legislation through Congress, disagreed that the plan has morphed beyond its original intent.

“Buying equity was always in the plan,” he insisted. Still, he said he would hold a Nov. 18 hearing to look at some of the developments that are troubling other lawmakers.

Among them is the fact that Pittsburgh-based PNC Financial Services used some of its $7.7 billion in taxpayer money to purchase Cleveland-based lender National City for $5.8 billion on Oct. 24.

That raised a question: Did the taxpayer money spur more lending, as the plan was intended to do, or did it just let one strong bank, PNC, get stronger by absorbing a weaker rival?

Some experts think it’s fine.

“I think it is very positive if it’s a healthy bank buying a weak bank, and it’s an all-stock deal,” said Bert Ely, an expert on banking regulation. PNC’s purchase of National City was in the taxpayer interest because it promoted an orderly and needed consolidation in the banking sector, he said.

However, on the same day as the PNC deal, the American Council of Life Insurers confirmed that Treasury was considering giving cash to some big insurance companies whose failure could pose risks to global finance.

“The purpose (of the rescue plan) is not to sell life insurance policies,” Frank acknowledged, noting that Treasury hadn’t told him that it might take stakes in insurers, too.

Yet another concern is that banks that receive cash from the government were allowed to continue to pay dividends to shareholders. That raises the prospect that taxpayer money will be funneled not to new lending but to well-heeled investors who buy bank stocks.