The ultimate success of Timothy Geithner’s plan to relieve banks of their most troubled assets hinges on a sales pitch that makes selling snake oil look easy.

Geithner must rather forcefully persuade private investors – from hedge funds, to private equity firms to sovereign wealth groups – to join forces with the government in taking the toxic-asset plunge.

The idea underpinning the whole plan is pretty straightforward: by hoovering up these assets you’ll help the banks tidy up their balance sheets. This financial Spring Cleaning will make the banks feel better about themselves - and act as an incentive to lend again.

Geithner’s proposes a Public Private Investment Programme to act as a sort of government vacuum cleaner: it will provide financing for up to $1 trillion in sour assets.

The private sector, he wrote in The Wall Street Journal, would end up sharing risks with the taxpayer, who would eventually share in the profits from the investment.

But I can’t help but ask myself whether this whole stratagem is simply a way of skirting the “nationalisation” issue. That is, bite the bullet and take major shares in banks deemed worthy of saving, as is partially the case with Citibank, in which the government holds a 36% stake.

Investor reluctance

The government sees the public-private scheme as a unique opportunity for the private sector.

It’s offering investors a subsidy to buy these troubled securities. The New York Times reports that the chiefs of investment programmes it interviewed were impressed with the terms of the programme which, it said, would offer government loans worth 95% of the value of an investment. But the paper also said potential investors, worried about future regulation, were reluctant to take part in the programme.

Yet, Geithner insists that it’s a win-win proposition since, “over time, by providing a market for these assets that does not now exist, this programme will help improve asset values” and increase the capacity of banks to lend.

According to media reports, the Obama administration promises to distinguish between companies like AIG, which are hanging on by the skin of their teeth thanks to government largesse, and private firms who willingly step up to the plate to help out the Treasury and Fed.

As one official put it, these are private firms that are doing us a favor, and the president realises they should not be lumped together with the woebegone lot.

As for me, I’d be reluctant to buy a uranium-235 isotope for my private keeping – even if it came at a bargain basement price. Who wants so much radioactive waste wafting around the house?