This analysis of the banking situation from David Goldman is about the best I have read:
The trouble from the beginning has been that the Geithner plan had the wrong idea about banking and economic growth. You don’t need to shuffle toxic assets around to get the banks to lend. The Fed can take care of the mortgage market, and has done so impressively. Mortgage rates have collapsed thanks to Fed purchases of MBS and first-time buyers are buying foreclosed properties, keeping the recovery rate in most markets at around 50% (and that keeps the toxic assets paying with limited impairment).
But you do need the banks to earn enough to compensate for the loan write-offs that inevitably must pile up during a deep economic downturn. That is why cannabalism is the cheapest and easiest solution. Of course Citi and JPM should be net buyers rather than net sellers of toxic assets. ... messy, and downright cannabalistic, but it’s by far the cheapest way out of the mess.
Me: Warren Buffett has said pretty much the same thing. Maybe Geithner will replaced bank executives with a more compliant lot.