It would be funny if it weren’t so tragic for the financial markets. The plan, orchestrated by Eric Dinallo, New York Insurance Superintendent, is being discussed with large investment banks, but at this point, such a plan has to be viewed as “in progress” at best.

And while some analysts believe some kind of agreement will be worked out, it isn’t going to be as easy (such as it was) when the lion’s share of investment banks pitched in to help Long-Term Capital Management unwind its positions in 1998.

“Something will happen, but it’s a Band-Aid when a tourniquet is needed,” says Bennet Sedacca, president of Atlantic Advisors. For his part, Mr. Dinallo said Thursday morning that there were “complicated issues” involved, and said “any effective plan will take some time to finalize.”

Indeed. As Yves Smith points out on Naked Capitalism, there are a number of big issues facing such a bailout. Among them: the limited understanding of the industry by the banks involved, the lack of urgency in getting such a deal done (the LTCM crisis was seen as about to blow up everything), and Mr. Dinallo’s relatively slight clout when compared with the New York Fed, which put together the LTCM rescue effort.

“Washington’s batting average for bailouts since the credit markets lurched last summer wouldn’t exactly put it in the clean-up spot,” writes Andrew Jeffery on “After its initial shock value, the Fed’s lowering of the discount rate aroused little response from the capital markets; the Super-SIV designed to bailout banks from their off-balance sheet exposure to asset-backed commercial paper failed to get off the ground; and the Hope Now Alliance to help subprime borrowers has run into significant road blocks, even after White House got the phone number right.”

For that matter, 1998 was still a bullish time for the financial-services companies. It isn’t any more, and it’s hard to see how the industry (save perhaps Goldman Sachs and J.P. Morgan Chase) will be able to find the capital to lend to another institution that is already struggling.

“You’ve got a bunch of banks that need to go around the world, hat in hand, just to stay in business, and you’re going to have them bail out a business model that doesn’t work,” says Mr. Sedacca.