Private equity, as has been widely anticipated, plays a key role in the government's plan to rid banks of toxic mortgage-backed assets. One of the components of the plan is a Legacy Loans Program, in which private capital will purchase troubled legacy loans from banks' balance sheets through the provision of FDIC debt guarantees and Treasury equity co-investment. Treasury anticipates that approximately half of the TARP resources for legacy assets will be devoted to the Legacy Loans Program.

The Legacy Securities Program is another component--this one aimed at the secondary markets. Its goal is to restart the market for legacy securities, by providing debt financing from the Federal Reserve under the Term Asset-Backed Securities Loan Facility (TALF) and through matching private capital raised for dedicated funds targeting legacy securities.

The Treasury Department released the details of its plan before the start of trading; initial trading suggests Wall Street is enthusiastic about the plan--unlike the first time it was unveiled, absent the details.