Obama & The Banks.

The Obama Administration is reportedly considering several fixes for the banking system. Many of these are the same solutions as put forth by the Bush Administration.
Some of the specific remedies under consideration include:
-A huge "bad bank" that would buy up bad assets. Unless the government buys these assets at fair value--which is to say, often far below the value that banks say they are worth--this will be amount to a huge transfer from taxpayers to bank bondholders and stockholders.
-Injection of more capital into banks via securities that would convert into common stock (bonds or preferred stock). This would leave the government owning the banks for some period of time.

-Guaranteeing further losses on bad assets but leaving them on bank balance sheets (the Citigroup "solution," also known as "ring fencing.") This postpones the burning of taxpayer money, but it also exposes the taxpayer to massive losses, because the banks will be sure to give taxpayers the worst-valued assets they own.

Why is it unlikely that the government would even consider the solution of paying fair value for the assets (a value much lower than what banks think their worth) and then injecting new capital? Probably out of fear of triggering another Lehman Brothers situation.

Bank stocks are higher this morning in part due to great earnings out of Northern Trust. {Long NTRS in certain legacy accounts. It is not a security we actively buy or sell.}