PPIP Deathwatch, May 28 Installment

More evidence, this in the Wall Street Journal, that Geithner's plan to purchase toxic assets from the major banks is hitting the skids: Plan to Buy Banks' Bad Loans Founders.

To be fair, this is only one piece of the public-private partnership effort to buy bank assets through a competitive bidding process. PPIP provides a mechanism for banks to dispose of both (1) loans (the article above) and (2) securities. The Treasury, in charge of the securities auctions, assures us that it's still going full-steam ahead.

Honestly though, I doubt the Treasury's earnest intentions will matter much. The banks will pull out the sharp knives, when Geithner isn't looking, and skewer him. They don't want to sell their impaired loans, their impaired securities, their impaired nothin'. The banks don't want to sell any of this crap at anything near a market price because, to maintain the fiction of solvency, they have to keep pretending it's worth more than its real value.

And what the banks want in this crisis, the banks get. The Obama Team feels most comfortable bullying Detroit and pandering to Wall Street.