There is one interesting point about this whole thing.  If the governent (US Taxpayer) is putting up almost all the money, and bearing almost all the risk, without any of the upside, why even involve private investors at all?  It simply makes no sense, unless the point really is about funneling more money to private institutions, and not just removing the toxic assets from their books. 

There is no shortage of big buy and hold investors out there sitting on a ton of cash.  Private investment capital to buy these assets is not the problem.  Private equity isn't stupid, they've done their analysis looking at current and projected loan default rates on these various assets.  If the Warren Buffett's of the world really believed that these assets were under valued they'd be feasting on them right now, instead of sitting in cash. 

The Treasury, FED and administrations whole thesis is that there is nothing fundamentally wrong in the banking system and this whole crisis is a confidence problem.

Lola: I do think a lot of those in charge actually believe that it's mainly a confidence problem and that the solution revolves around simply getting people to "believe" again.  Yes, I think there are some outright crooks up top.  But, I think there are others like Ben Bernanke, that simply are wedded to a thesis that is dead wrong, and so all of their proposed solutions revolve around fixing symptoms not the cause.

Bryant: 

There's always buyers, there is no shortage of cash sitting on the sidelines right now.  The question is price, just like listing a house.

The banks claim these assets are worth more than the market will pay, and continue to value them at an inflated price in level 3 assets where they don't have to take write downs.  The market has done their homework and is calling BS on the pricing, so there is a stand off.  Banks won't sell them because they can't get the price they want and buyers won't buy them because the asking price is too high.  The Treasury/FED/Gov. thesis is that the banks are correct in their pricing and the buyers are simply irrationally scared.  Many of the proposed solutions such as this one, revolve around incentives buyers to overpay for assets.

Actually the situation is almost exactly like a very similar to the problem many real estate agents around here are running into when dealing with the banks on foreclosed properties.  Banks won't accept the market reality on pricing, and are refusing to respond to perfectly good offeres. 

Let the games begin, the New York Post reports

"Citi and Bank of America have been aggressively buying up Alt-A and ARM mortgage backed securities, sometimes paying more than the going rate of around 30 cents on the dollar."

Instead of trying to offload the toxic stuff from their balance sheet they are buying up as much as they can get from funds right now, in an attempt to flip it back for a massive profit when the Geithner's plan goes into effect.  Disgusting...