This point is pretty straightforward. There are junk mortgages all around. If the Treasury/Fed subsidize the purchase of the junk (or mortgage backed securities based on the junk) at Citigroup and other banks, then these assets become more attractive than the junk mortgages at smaller less politically connected banks, which don't come with government subsidies. So, this means that there will be less money for the potentially bad assets at these smaller banks.
In other words, by helping the big banks, the Geithner plan will likely to be sending more smaller banks into insolvency. This deserves some attention from the media.
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