New York's Citigroup Inc. (NASDAQ:PLJC), the financial giant that first proposed the initiative, is devising a separate rescue plan and HSBC Holdings PLC and several other European banks are moving to solve their problems on their own, The New York Times (NYSE:NYT) reported.

The new superfund, created by the banks to keep the crisis in housing-related debt from deepening, began raising money from financial institutions Monday.

But it now looks increasingly irrelevant, the Times said.

The banks, with the support of U.S. Treasury Secretary Henry Paulson, originally thought the Master Liquidity Enhancement Conduit, or M-LEC, might raise $80 billion to prevent a sharp sell-off in securities owned by structured investment vehicles, or SIVs, the newspaper said.

But now, the M-LEC, known as the Super SIV on Wall Street, may raise just $60 billion, in part because many of the troubled SIVs are winding down themselves, the newspaper said.

"Who needs a Super SIV anyway?" JPMorgan Chase & Co. fixed-income analyst Alex Roever asked in a new research report.

"There certainly seems to be a shrinking supply of SIVs to save," he said.

The superfund, managed by investment bank BlackRock Inc. (NYSE:BLK), is expected to go into operation next month.