The buzz today is focused solely on Treasury Secretary Timothy Geithner's financial stability plan. My quick verdict is that the plan is woefully inadequate on details, and I just don't understand the rush to announce this plan without a more specific framework for implementation.

Frankly, I believe we will eventually need to realize that most of our banking system is probably insolvent and nationalize its most troubled institutions, a la Sweden, and try to start basically anew. Obviously, that plan would be a disaster for anybody who owns current debt or equity in those institutions, and it would definitely lead to some scary soul-searching about the nature of our capitalist system, but that is a price I believe we have to pay. I just don't to waste trillions of dollars before we end up getting to the same place.

The four components of Geithner's plan are (Videos underneath - one Facebook, one YouTube, same content, just wanted to compare quality):

1) Stress Test - Try to get an accurate assessment of the health of banks, and the toxicity of their assets, and stabilize the most trouble banks with short-term Treasury capital. The goal is to get these banks as quickly as possible to step 2, which is ...

2) Create a private-public investment fund - This fund will be financed by both government (re: taxpayer) and private capital and will be mandated to buy bank assets after determining their 'fair value' (although the hope would be that those assets would eventually be sold at a profit, so fair would be in the eye of the beholder). The structure of this fund, which will start at $500 billion but could rise as high as $1 trillion, is still being explored.

3) Consumer and Business Lending Initiative - The Federal Reserve will be financing a $1 trillion plan (backed with Treasury capital) to specifically target and revitalize consumer and small business lending.

4) Comprehensive Housing Program - Somehow, the government is going to reduce mortgage rates and payments for homeowners.

The potential pitfalls with the plan are

1) What happens if the stress tests reveal that many troubled banks are insolvent? How do you stabilize an insolvent bank? Do you let those banks fail? How much money will this cost?

2) How will the government encourage private capital participation without agreeing to take on most of the risk and/or allowing the private guys to capture much if not all of the upside? How do you get banks to sell the assets at fair or lower prices if you are stabilizing them with Treasury money?

3) Should the Federal Reserve being targeting specific lending goals and initiatives (It is very dubious that is in their mandate)? Does the cost of this plan create a run on our foreign-owned debt, causing foreign governments to sell at any price? Isn't consumer debt what got us into this mess in the first place?

4) By reducing interest rates and mortgage payments, will the government be setting an artifical floor in the housing market? Will it respark a mini-housing bubble and excess consumption when people would be better off renting?

The good news about the plan is that a key focus will be transparency and accountability, including one of Obama's much-loved Web sites (http://www.financialstability.gov)