by Calculated Risk on 2/05/2009 11:17:00 AM

From CNBC: White House Now Plans Limited Bank Aid Package

The Obama administration has decided on a new package of aid measures for the financial services industry, including a bad bank component, and is expected to announce them next Monday, according to a source familiar with the planning

The plan will be "smaller" than originally expected, said the industry source, and centered around government guarantees and insurance of troubled assets, what's called a "ring fence" concept.
...
Under the emerging plan, the government will buy toxic assets below the banks "carrying value," which is basically market value, but not at fire sale levels ...

If the government buys assets below the banks carrying value, then the banks will have to take additional write-downs and will need more capital. With this plan the taxpayers are still taking all the risk, and the shareholders of the banks receive the rewards. That still doesn't make sense.