Anyone who spends $700 billion in a panic is bound to suffer some spasms of buyer's remorse.

The Troubled Asset Relief Program, despite the stratospheric sticker price, seemed like a great deal on Oct. 3. That wily salesman, Hank Paulson, assured everyone it was a small price to pay for rescuing America's too-big-to-fail financial giants, staving off collapse of the global credit markets and, ultimately, injecting a powerful stream of liquidity into the economy.

The sheen on that model dulled pretty quickly. The public has a rabid dislike for what seems like a lifeline only for the big institutions that caused the financial mess.

When Paulson's successor as treasury secretary, Timothy Geithner, announced a reworked plan for using TARP's remaining $350 billion, it fell flat with Wall Street and received harsh reviews in the press. His new ideas seemed little more than a spin on Paulson's old ideas: more federal capital for banks, another try at purchasing banks' illiquid assets and finally rolling out a previously announced plan to back securitized consumer loans. The Term Asset-Backed Loan Facility, announced in October but never put in operation, will get $100 billion in federal startup funds rather than the originally envisioned $20 billion.

So President Obama is sticking with Paulson's lemon. ... Or is he? There are some differences that could be big, if Geithner gives them bite. To receive more federal capital, for instance, banks must pass a so-called stress test showing they can weather further declines in the economy. If the test is tight enough, no more federal capital would flow into precarious institutions. Another shift: Rather than have the government price troubled assets as Paulson proposed, Geithner wants private buyers to do the bidding and foot most of the bill. Some major institutions might even fail if private offers are so low that the necessary write-downs result in insolvency.

The stock market, and bank stocks particularly, fell the day of Geithner's announcement. The market's disappointment was widely attributed in the media to a lack of specifics in his plan. But disappointment among bankers hoping for another round of federal largess has been cited by some analysts as a possible cause.

Whether more massive write-downs will occur is the question of the moment. The true state of the country's money center banks is a matter of heated debate but a number of prominent analysts insist several are insolvent. Research firm CreditSights Inc., in a recent report on major banks' potential losses, predicted that without additional federal capital, Citigroup, Bank of America Corp., Wells Fargo & Co. and J.P. Morgan Chase & Co. will be under water. CreditSights estimates the four institutions will need roughly $450 billion in new capital simply to cover their exposure to their deteriorated portfolios of mortgages and mortgage-related securities. CreditSights' estimates jibe with the pessimistic views of New York University economist Nouriel Roubini, who a year ago was ridiculed for predicting that banking sector losses would top out at roughly $2 trillion. (More recent estimates from the International Monetary Fund and Goldman, Sachs & Co. now corroborate the $2 trillion figure.)

The idea that some of the largest U.S. banks can't continue without federal intervention has also been gaining traction on Capitol Hill. "If you put most of our banks under a stress test they're going to fail," Sen. Lindsey Graham, R-S.C., told ABC's "This Week" on Feb. 15. Graham says it's time for Washington to "nationalize" banks, a shocking position for an economic conservative.

"Nationalization" is a politically charged word that conjures up notions of government-apparatchiks micro-managing every lending decision of the country's biggest banks. In reality, an insolvency would lead to a government-led reorganization. Shareholders would be wiped out and management fired. Bondholders and new investors -- which would presumably include the federal government -- would become the new owners. Daily management would be left to a new team of private executives, not Uncle Sam.

Citigroup Inc. CEO Vikram Pandit offered an oblique acknowledgment that insolvency could be in his firm's future during a Feb. 11 hearing before the House Financial Services Committee. Rep. Keith Ellison, D-Minn., asked Pandit whether they would "be here in a few months talking about the demise of Citigroup?"

The CEO's answer was hardly a steadfast rejection: "Congressman, I intend to make sure that's not the case."

Pandit's counterparts are in a little better shape and can maintain a rejectionist line. "You talking to me?" Bank of America chairman Kenneth Lewis responded when Ellison posed the survival question to him. "Absolutely not," Lewis insisted. "I don't know why you'd ask the question."

Lewis claimed that BofA's Tier 1 capital ratio is 2.6% of assets, and that would be sufficient to see it through foreseeable problems. "We did not lose money like some banks across the world," he said. Though the acquisition of Merrill Lynch & Co., which did lose lots of money, is weighing heavily on BofA's balance sheet, Lewis insisted the Treasury's additional $20 billion infusion "filled the hole" from write-downs caused by the broker-dealer. He said the acquisition of Countrywide Financial Corp., at the center of the subprime debacle, was "not big enough to affect us in any big way."

Lewis' tough talk may be replaced with a sheepish request for another handout, if the predictions of Friedman, Billings, Ramsey & Co. analyst Paul Miller are correct. In a recent report Miller warned BofA that total losses stemming from Countrywide might reach some $33 billion. Given that BofA has set aside only $23 billion for future losses in its entire mortgage portfolio, Lewis could end up needing a fresh infusion of taxpayer money.

Wells Fargo's John Stumpf and J.P. Morgan's Jamie Dimon, also at the Feb. 11 hearing, said they did not anticipate needing more money from the federal government. If J.P. Morgan requests more money, "It won't be me" who asks, Dimon said.

How stable the big banks are could become apparent when Geithner unveils the stress test, which banking institutions with assets above $100 billion must undergo. Geithner could rig it so none of the big banks fail, but skeptics would undoubtedly howl at the effort.

Meanwhile, the evidence of how much, or even whether, TARP has helped the credit markets is conflicting. As of Jan. 23, Treasury had disbursed about $294 billion of the TARP program's funds. Most of the money, $194 billion, was invested in 317 financial institutions around the country, the overwhelming number of which were healthy banks.

And, even the most troubled of the money center banks, Citi and BofA, say they have begun making hundreds of millions in quarterly dividend payments on time.

Nor was the image of the program helped by the seemingly endless reports that pay, bonuses and perks were continuing despite the economic downturn. The latest was a Jan. 29 report from the New York state comptroller that Wall Street firms doled out more than $18 billion in bonuses last year.

Obama has described those bonuses, as well as aircraft purchases and luxurious corporate retreats, as the "height of irresponsibility" and "shameful."

There's plenty of evidence that the cost of interbank lending has declined as financial institutions have become more confident that their counterparties will be in business at least for the short term. The most common gauge of interbank lending is the TED spread, or difference between rates on Treasury bills and LIBOR. The TED spread peaked at more than 450 basis points on Oct. 10, three days before the Treasury Department's capital purchase program began. Between Oct. 13 and Jan. 20, the spread declined by more than 350 basis points, to its lowest level since August, according to the Government Accountability Office.

As of Feb. 20, the spread stood at 96.

The lower spread is due to the declines in LIBOR, an indication that banks are increasingly willing to lend to each other.

The GAO says TARP could be a reason for LIBOR's declines, but so could coordinated interest rate decisions of central banks worldwide.

Even more unclear is whether bank lending has increased after the TARP investments. The financial industry insists that bank lending is rising. Citing Federal Reserve data, the Financial Services Roundtable argues that bank lending increased $336 billion, or 4.9%, from the third to the fourth quarter of 2008. The period covers the initiation of the TARP program.

Analyst Richard Bove, who last week left Ladenburg Thalmann & Co. for Rochdale Securities LLC, found that lending increased by $146 billion during the fourth quarter among the 13 largest recipients of TARP funds, up 4.7% from the previous three months. Bove's numbers contradict a Jan. 26 Wall Street Journal story that found 10 of the 13 biggest beneficiaries of TARP financing reduced lending. According to the newspaper, only U.S. Bancorp, SunTrust Banks Inc. and BB&T Corp. increased lending during the quarter.

Bove found that 12 of 13 increased their lending, although he conceded the uptick was nominal at Citigroup.

Even if the industry's numbers are right, two Harvard Business School economists say the industry numbers aren't as favorable as they would seem. Victoria Ivashina and David Scharfstein released a study in December showing that to the extent bank lending has increased, the additional lending is due to companies drawing down credit lines to prepare for a worsening economy.

One thing clear about TARP is the public's hostility toward it. That has some of its authors performing verbal gymnastics to disassociate themselves from its administration so far.

Geithner conceded the ad hoc decision-making and lack of accountability requirements on the recipients have undermined public support when he unveiled his revamped TARP plan on Feb. 10.

"It all begins with transparency," Geithner told the Senate Banking Committee. New limits on lobbying and executive compensation, stress tests and tracking procedures will allow Americans "to see where their tax dollars are going and the return on their government's investment."

Senate Banking Committee Chairman Christopher Dodd, D-Conn., has also tried to focus the blame on Paulson and former President Bush. "I believe that the TARP program remains a critical tool our government will need to address the economic crisis," Dodd says. 'If ever there were a program in need of a sign in front that read 'Under New Management,' it's this one."

But no matter how hard they try to blame a previous regime, there's no escaping that TARP's enabling law was written by a Democratically-controlled Congress and Geithner, in his previous post as New York Fed chief, was involved in nearly every substantive discussion of last year's intervention.

In the end, TARP's transparency and accountability shortcomings will be less important to taxpayers than whether it shows measurable results. That won't be easy. The GAO says "even with more time and better data, it will remain difficult to separate the impact of TARP activities from the effect of other economic forces."

That might be bad news for the Geithner-Obama team. The economy is expected to get worse throughout 2009 and the banking industry's losses are projected to mount. Warns Congressional Budget Office director Douglas Elmendorf: "The scale of those losses suggests that many financial institutions and markets will remain deeply troubled for some time."