IN OTHER WORDS:Bank rescue

President Obama’s long-awaited plan to revive the banks could work if certain assumptions about the future are right. But there is not much, beyond faith, to believe those assumptions will pan out — and even if there were, it is hard to see how the plan is the best way to go.

In the near term, the plan would provide financing to buy $500 billion of banks’ bad assets — and possibly up to $1 trillion over time. Most of the financing would be in the form of low-cost government loans and loan guarantees for private investors who buy the troubled assets.

The first assumption is that those battered assets will recover handsomely, thus allowing the government loans to be repaid with interest.

There has, however, been no independent assessment of the assets or their underlying collateral.

In other banking crises, both in this country and abroad, resolution of a systemwide problem has sooner or later involved separating solvent banks from insolvent banks.

In the end, there is no getting around firing the executives at failing banks, acknowledging the losses, wiping out the shareholders and then deciding how the government can best restructure the institutions. The Obama administration has yet to explain why its approach is better than that.