From Tim Geithner’s Stress Test.

“The offending slides confronted the hypothetical of a bank that couldn’t raise enough private capital to fill the hole identified by its stress test: What would we do if we had to inject so much TARP capital that the bank was effectively nationalized?

Lee and Larry had agreed to present two options to the President. One was the Treasury plan for a “conservatorship approach,” which would allow us to handle a bank in a way similar to the government’s handling of Fannie and Freddie, so we’d have the discretion to wind down our investments gradually to minimize shocks to the system and losses for the taxpayers. The other was Larry’s “rapid resolution exit,” which would require an immediate restructuring of the bank, including immediate liquidation of bad assets. Both options had their theoretical merits, but I didn’t think Larry’s approach was feasible or desirable.

Somehow, though, Larry had talked Lee and Kabaker into making his strategy sound like a cool hawkish approach that would make the President a populist hero, while ours sounded like an equivocating dovish approach that would make the President seem cowed by the banks. “There’s no way you can present it like that! You’re making the dominant option look pathetic!” I said over the crackling on the line. “You can’t say we’re dove and he’s hawk. There’s no dove. You’ve got to make it Hawk One and Hawk Two!”