Jeffrey Sachs has looked at the plan, and his assessment is that it is far worse than previously believed, noting that, “Insiders can easily game the system created by Geithner and Summers to cost up to a trillion dollars or more to the taxpayers.”

Basically, it means that the banks can set up off the balance sheet subsidiaries to over pay for the assets, and when they go bankrupt, the federal government is left holding the bag:

Citibank thereby receives $1 million for the worthless asset, while the CPPIF ends up with an utterly worthless asset against $850K in debt to the FDIC. The CPPIF therefore quietly declares bankruptcy, while Citibank walks away with a cool $1 million. Citibank’s net profit on the transaction is $925K (remember that the bank invested $75K in the CPPIF) and the taxpayers lose $925K. Since the total of toxic assets in the banking system exceeds $1 trillion, and perhaps reaches $2-3 trillion, the amount of potential rip-off in the Geithner-Summers plan is unconscionably large.

This is so stupid and corrupt that Larry Summers has to be the guy who came up with this.