Treasury Secretary Timothy Geithner announced the Obama administration’s plan to stabilize global credit markets today. The idea is to create a partnership between government and private investors which will hopefully jump-start new lending by absorbing $1 trillion in bank’s toxic assets.

At the heart of the proposal is a plan to expand the new Term Asset-Backed Securities Loan Facility, or TALF, to start the Public-Private Investment Program for Legacy Assets — a partnership to acquire the bad loans. TALF would buy the loans from banks and then bundle them into privately administered investment funds that would be partially guaranteed by the Federal Deposit Insurance Corp.