Big banks accepted TARP funds to help them deal with the losses stemming from their illiquid portfolios of toxic assets. Now, some of them also want to buy some of those very same assets via the taxpayer-funded PPIP program. To some politicians, this amounts to raw absurdity. One senator, Spencer Bachus, has called such plans "gaming the system to reap taxpayer-subsidized windfalls."

For now, the likes of Goldman Sachs, Citigroup, Morgan Stanley and JPMorgan Chase are considering whether their asset management arms should bid for toxic assets (from other banks) or perhaps apply to be one the government-designated fund managers, reports the FT. While this may seem like banks swapping assets at higher prices, it also seems like these big banks offer a good source of liquidity. We'll see whether this takes on a life of its own in Washington. One senator is already planning action to stop this. 

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