Buying the Bad Stuff: Implementation Considerations for the Paulson Plan

The Department of the Treasury intends to rely on auctions to price the mortgage-related assets for which it will be a purchaser. The US Treasury is and has long been a frequent and massive seller of US government securities at auction. It obviously has extensive experience in implementing auctions in which it stands alone on one side of the market. Is the only difference between the usual Treasury auctions and reverse auctions for mortgage-related assets the side of the market where Treasury stands?