Martin Wolf yesterday

The second priority is recapitalisation - essential if institutions are to be deemed creditworthy after the guarantees are withdrawn. Governments should insist on a level of capitalisation that allows for further write-offs. They should then either underwrite a rights issue or purchase preference shares. Either way, governments should expect to make a profit on their investments when these institutions return to health, as they should do.
Third question: what to do about the bad assets? Sometimes it makes sense to take such assets from the banks. That is what the new US “troubled asset relief programme” (Tarp) is designed to do. Elsewhere, however, the quantity of bad locally-generated assets seems small - rendering such schemes unnecessary and, if if banks are adequately recapitalised, also redundant. Similarly, if banks are adequately capitalised, concerns about mark-to-market accounting are less important, since balance sheets can cope with the needed write-downs.
The biggest question about these proposals is whether governments can afford them. Some economists argue that many banks are not only too big to fail, but too big to save. But what matters is the ratio of worst-case fiscal recapitalisation to GDP. Unfortunately, even this can be huge. If a recapitalisation of a substantial number of eurozone banks were needed, some member states might be unable to put up the money. There would be danger for the rest if that government chose either to do nothing or to initiate a debt-equity swap. Such actions might then raise panic everywhere. Fiscal solidarity might prove inescapable. In any case, co-ordination on how to proceed is essential if a healthy eurozone banking system is to re-emerge.
http://www.ft.com/cms/s/0/3dc401f8-949a-11dd-953e-000077b07658.html