Prof. Bebchuk has been pushing for a government-sponsored sale of toxic assets to private funds, but he proposes the following as a way of making the risk/payoff more fair for taxpayers:
Basically, let the market decide the ratio of private investment to private share in the upside. (Geithner's plan allows the FDIC to determine this to some degree, where they have analysts set a debt to equity ratio up to 6:1.) Lebchuk proposes that the potential buyers should indicate what percent of the auction price they're willing to pay for what share of the upside later. Then auction the asset pool.
Here's the article on his Harvard blog, from March 31st.
http://blogs.law.harvard.edu/corpgov/2009/03/31/a-fix-for-geithner/"....Treasury officials believe that because private parties have not thus far established funds dedicated to buying troubled assets, favorable terms are needed to induce their participation. This logic is reasonable, but it is important to keep the government subsidy at a minimum. Without any market check, the terms set by the government could substantially overshoot what is necessary to induce private participation and end up imposing large and unnecessary costs on taxpayers.
A program of public-private funds should be designed to minimize costs to taxpayers. To attain this objective, the government should base the terms of participation on a process in which private managers compete to be in the program...."
There are more links in the article if you're interested.