Cleaning Augean stables

So it's not just Krugman. Go read this:

Consider what happens when the government acquires an insolvent bank. The shareholders and the debt holders of the bank’s holding company may be essentially wiped out...

Treasury’s new plan, the Public-Private Investment Program, reduces that incentive by preserving shareholder and debt holder ownership of insolvent banks. ...

The government will bear almost all the exposure to losses from these transactions, but earn only a small fraction of any profits. ...

Even if it is successful, the program will add very little new capital to the banks — roughly only the amount paid for toxic assets that is over and above their current value.

I have nothing to add to this clearly written, clear-eyed, hard-headed piece - well, nothing other than my accolades.