Here is the practical problem. Investors will undoubtedly mark up the prices for the good part, but how are we going to induce them to buy the bad part? After all, if the assets in this part are proven money losers, you would have to pay people to take parts of these assets. In the case of Citi, the plan is obvious. They want to keep the good part and spin off the toxic part to the government; in effect, tax payers will be left holding pieces of assets that will generate negative cash flows as far as the eye can see. If I were negotiating for the Treasury, I would demand a large chunk of the good part (in options or equity) in return for taking the bad part. Otherwise, it seems like a bad deal!