Let's step back and take Bank of America as an example. A great deal of its toxic garbage is concentrated not in its retail and consumer banking divisions, but in its investment banking and securities trading divisions, especially after the acquisition of Merrill Lynch. In other words, its chartered depository bank is doing just fine and is no danger of missing capitalization requirements. However, its other divisions are struggling under the weight of the toxic assets and could fail. But, no one can touch those.

I doubt it is true that Citi's BANKS are walled off from these toxic assets. Citigroup's financial reporting is Consolidated (PDF), but it did report the following:

During 2008, Citibank, N.A. received contributions from its parent company of $6.1 billion. Citibank, N.A. did not issue any additional subordinated notes in 2008. Total subordinated notes issued to Citicorp Holdings Inc. that were outstanding at December 31, 2008 and December 31, 2007 and included in Citibank, N.A.’s Tier 2 Capital, amounted to $28.2 billion. Citibank, N.A. received an additional $14.3 billion in capital contribution from its parent company in January 2009.

(Emphasis supplied.) If CitiGROUP funneled $20.4 billion dollars to CitiBANK, N.A. in 2008 and 2009, it seems clear to me that CitiBANK, N.A. is holding at least some of the toxic assets in question. But what if Geek is right and CitiBANK is ok. His solution would appear to be to bailout the "NON-BANKS." He does not explain why this would be necessary other than saying that the problem is there - that is what has caused the financial crisis. I do not see that identifying the "NON-BANKS" as the cause of the crisis is an argument for why they should be saved. Indeed, it seems an argument for letting them die.

The important question is not how to save what caused the disaster - it is how to fix the disaster. In that sense Martin Feldstein's Wall Street Journal column is instructive. Feldstein supports the Geithner Plan but thinks it is a trillion and a half dollars short on the free handout to the Masters of the Universe. I kid you not:

The Treasury's new Public-Private Investment Plan should be regarded as a pilot study to see if this approach can remove impaired assets from the nation's banks. If it works, Treasury will have to go back to Congress for substantially more funding to remove enough impaired assets to get the banks lending again.

(Emphasis supplied.) You see how great the Geithner Plan is? IF IT WORKS, it will then require trillions or more dollars of taxpayer money being handed out to the Masters of the Universe. and yet, consider what Feldstein says the problem is:

Increased bank lending is the key to a sustained recovery. Households and businesses that cannot obtain credit are now unable to spend and to invest, dragging down total demand and GDP. The banks are unwilling to lend because they lack confidence in the value of the loans and other assets they already carry on their books, and therefore lack confidence in whether they have enough capital to avoid insolvency. Removing these high-risk assets is a prerequisite to get the lending mechanism in gear again.

But regulatory receivership accomplishes this with transparency and efficiency. Why is that not the better course? Feldstein does not tell us. He merely applauds the fact that "nationalization" is avoided.

To me, that is not a compelling argument. Indeed, if anything, we need transparency and regulatory receivership will be the only way to get it. Why do we need transparency? Because the public and the Congress will not hand over the money Feldstein says we need without it.

At this point, whether Obama, Geithner, Summers Feldstein or Geekesque like it, regulatory receiverships, voluntary or involuntary, based on existing law or under future law, will be required. To me, it is that simple. The crisis demands it be now, not later.

Speaking for me only