It seems we've come full circle. Back when the Treasury was first formulating its buyout plans, it appeared bent on buying up toxic assets. That lasted all of about a month, as it became clear that running a massive bond management operation wasn't going to be feasible, though some big name firms applied to help in the valuation process. Investing directly in companies seemed like a better idea, but that has produced only middling results. So the Obama Administration has come right back to the idea of investing in securities. Once again the big issue is how to value the securities in question. We're in uncharted waters here. The stakes are high and taxpayers and banks are really not aligned. A low valuation could hurt banks, while a too high valuation would stick it to taxpayers.

For more:
- here's a New York Times article

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So how do you deal with toxic assets?