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(Please welcome author Nomi Prins in the comments — jh)

Nomi Prins used to work for Bear Sterns and Goldman Sachs. She left all that to write about the world of finance. She’s currently writing a book on the financial crisis with my favorite title of the year: It Takes a Pillage: Behind the Bailouts, Bonuses, and Backroom Deals from Washington to Wall Street.

She writes about Timothy Geithner’s new Public-Private Investment Plan in Mother Jones, and says she thinks it’s actually worse now than when Paulsen first offered up a similar plan last year:

I’ve never been a fan of any toxic asset purchase plan (nor of the capital injection through stock purchase plans). Randomly buying a bunch of heavily layered, heavily leveraged securities and expecting them to be profitable some day has never made sense to me, especially when nothing is being done to bolster the underlying collateral. The White House and Treasury Department are throwing money at the banking and finance industry, while simultaneously doing little about the loans and borrowers at the bottom of the crisis—not to mention the very risky and overleveraged structure of the banking system itself.

The administration is caught up in crafting big plans to solve the problems of big banks. Instead, it should be dissecting the system into transparent, quantifiable, and understandable parts—and then dealing with those elements that can and should be assisted. Geithner ought to jettison the too-big-to-fail nonsense and keep it simple: Break up the banks into their commercial and speculative parts, and separate the assets along similar lines. Let the speculative parts die, and tend to the rest. As it stands, the present solution—propping up the entire system in a complex, highly leveraged manner that depends on the kindness of the culprits that caused this mess—is a colossally expensive exercise in bipartisan stupidity.

Nomi has long insisted that the real problem is a lack of transparency within the system: "No one has a clue about the true nature of Citigroup’s books or health, or AIG’s. Nor of Bank of America’s or Wells Fargo’s, or for that matter, JPM Chase’s." She thinks we need to bring back "a modern version of the bipartisan Glass-Steagal Act of 1933," and start chopping up these "too big to fail" institutions into manageable pieces.

A lot of people expected that the anger over the AIG bonuses would give Timothy Geithner the opportunity to demand executive compensation to be tied to long-term performance of the company, but when asked about today Geithner punted. It seems that those who are hoping that Geithner will do anything more than prop up a badly broken system are destined to be disappointed.