I haven't seen it put more appositely than this, and it relates to the Sweden debate we were airing yesterday:
The right thing to do is reboot the financial system. Find out immediately which banks are insolvent, using market prices. Allow private owners to fully recapitalize, if they can. Have the FDIC take over all banks that cannot raise enough private capital. Try to re-privatize those banks quickly, while making sure the taxpayer has strong participation in the upside. The difficulty with this approach is not, in the US or elsewhere, anything technical - it is really quite straightforward. The problem here and everywhere else that has faced a serious financial crisis is: the power of the banking lobby.
Is the Geithner approach a sensible pragmatic response that could work over time with minimal disruption? Or is it a loss of nerve with respect to the banks? I don't know. But it seems to me that Plan B - nationalization of a handful of mega-banks - should be in the tool-kit going forward.