after the bailout/rescue

The Treasury will have a pile of cash and will go into the marketplace to buy up the lousy mortgages. I think the best case is that they will play hardball in the negotiations, pay well under book value. This will mean huge losses to the banks which will hit their bottom lines very soon. Other capital from overseas will sweep in and buy up US Banks. The markets will bounce back and the Treasury will be able to sell the lousy mortgages at increased prices and replenish its coffers.

More likely the feds will not play hardball at the table and will pay nearly book value for the securities. This will mean the banks will not take a hit and the Treasury will. Very little disruption to the markets for now, but a further expansion of the national debt will set us right back on the same path that brought us to this point. Weakening currency, some inflation, low growth in GDP, jobs and wages. Ho hum.