Will Toxic Debt buyout Work?

WASHINGTON (CNN) -- If Treasury Secretary Tim Geithner is hoping to find strong bipartisan congressional support for his long-awaited troubled-asset bank relief plan, it appears he'll need to keep looking.

A key Republican congressional leader blasted Geithner's plan within hours of its release Monday, saying it amounted to a flawed "shell game" that hides its true cost from taxpayers.

The plan is deceptive and "fundamentally flawed," House Republican Whip Eric Cantor, R-Virginia, said in a written statement.

"The plan seems to offer little incentive for private investors to participate unless the subsidy is made so rich that it comes at the expense of the taxpayer. In its current form, Secretary Geithner's plan is a shell game that hides the true cost of the program from the taxpayers that will be asked to pay for it."

One of the Senate's most prominent fiscal conservatives, however, issued a more positive response.

Sen. Judd Gregg, R-New Hampshire, said that he didn't know if the plan would work, but called it "a genuine and sincere effort to try to free up the credit markets and especially to get balance in the real estate markets which are at the core of the financial problems."

Under Geithner's Public-Private Investment Program, taxpayer funds will be used to seed partnerships with private investors who will buy up toxic assets backed by mortgages and other loans. The goal is to buy up at least $500 billion in existing assets and loans, such as subprime mortgages that are now in danger of default. - CNN Story

Will it work? I haven't gotten a chance to really look it over. My question with all of these bailouts is simple. We buy up the bad debt, then what happens to it? Where does it go? Do the people who owe the debt still owe it? Will we recoup some of the bad debt? I haven't quite figured that part out yet.