Treasury Secretary Timothy Geithner's financial-rescue plan may be doomed if he doesn't offer low-cost loans to hedge funds and other investors to help them buy toxic assets weighing down bank balance sheets.

Creating a "bad bank" or "aggregator bank" that would use federal funds to acquire and warehouse the assets, as some have proposed, would be costly for taxpayers and require too much government interference, say two experts on distressed securities who have pitched an alternative plan to officials.