A brief digression. Years ago, I watched superstar attorney David Boies argue for federal court approval of a class-action settlement he had negotiated (for the curious, it was the Sotheby's/Christie's antitrust litigation). Normally, courts disfavor so-called "coupon settlements" because a coupon, as opposed to cash, tends to be useless to the average class member. Boies, however, believed that in this particular case, the coupons would have a significant cash value (in other words, there would be a secondary market for them) and thus the coupon settlement was in the best interests of class members.
How did Boies win the argument? Much like the idea I've quoted above, he told the judge that instead of taking his attorney's fee in cash, his law firm would accept COUPONS as part of the fee - in the same proportion that class members would be asked to accept coupons. So he was actually staking his own livelihood, not merely that of the class members, on the proposition that the coupons had value.
I cite this real-life example to illustrate that this is not just some lunatic idea off the Internet. In fact, it really does force senior management to stand behind the valuation they attach to the bank's assets, in a very real way. Maybe this will force a re-valuation of some of the assets, maybe not, who knows. But at the end of the day, this solution gets a lot of toxic assets off the books, and the marketplace will have more respect for the valuation of the assets that remain on the books - knowing that senior management is staking their own personal compensation on the proposition that the valuation is accurate.
I can say with no hesitation that this is a far better idea than anything I heard today from the folks who are actually running the Treasury.