In the bailout mania that has engulfed the industry, one of the thorniest questions has been how the government--or anyone else--can accurately value toxic securities. Many thought the reason Paulson's Treasury gave up on its original idea to buy securities directly was because of valuation challenges.

But Tim Geithner's Treasury has come back to the idea with a public-private concept that calls for several funds "to vie for these securities, sources familiar with the plans said yesterday. By competing to buy assets, the funds could set a market price that would finally allow banks to sell them off," reports the Washington Post.

Private investors are key, and the administration aims to woo them with guarantees and shared risk. The program seems to be modeled on the TALF, reports the Post, which is just now getting underway. The TALF, which will focus on new credits, will start taking applications from investors March 17 and handing out money a week later. We'll see which funds come forward to participate. 

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