Regarding the windfall for banks that the TARP and other programs have created, it does not appear much has changed. While banks will not have the opportunity to sell the asset they acquire to the government, they will still have the opportunity insure these assets since section 102 of the Emergency Economic Stabilization Act requires that an insurance option be established.
Like much with the Act the details have yet to emerge, and thus it is impossible to evaluate the specific insurance options the banks may have. Comments for Section 102 were due by October 28th, however the extent of the guarantee is laid out in the original bill:
EXTENT OF GUARANTEE.—Upon request of a financial institution, the Secretary may guarantee the timely payment of principal of, and interest on, troubled assets in amounts not to exceed 100 percent of such payments. Such guarantee may be on such terms and conditions as are determined by the Secretary, provided that such terms and conditions are consistent with the purposes of this Act.If the government ends up guaranteeing 100% of the payments and principle that is even better for the banks than an outright, presumably discounted, purchase. In theory, the insurance program could be designed to insure the assets at current market value, if that can even be determined. To be sure this will be complicated task and will likely be developed in real time much like every other program.
Disclosure: I am long RKH.