Treasury Secretary Hank Paulson rounded up all the major banks for a big meeting Monday and all but told them they'll collectively be accepting $250 billion in government capital. The idea, of course, is to get banks lending to one another and to businesses again, by injecting not only money but also a measure of confidence into the banking system. Because while the Dow bounced back 11 percent today, its most dramatic gain since 1933, the market is still off sharply this year. (The chart above shows three months of the S&P 500, still poised for its worst yearly loss since 1937.) In addition to liquidity, Treasury is also providing some lavish new guarantees, which has the media scrambling to pick up the inevitable new angle: We're inflating another bubble here!

Under Paulson's plan, the government is planning to guarantee new bank-issued debt for three years, plus all non-interest-bearing bank deposits.

The Wall Street Journal said "not all of the banks involved are happy with the" cash injection and the guarantees, probably (we're guessing) because of executive compensation caps that come with the help and jealousy over some banks getting more than others. But Times photographer Susan Etheridge still managed to catch John Mack of Morgan Stanley and Vikram Pandit of Citigroup (above) grinning as they came out of the meeting. They don't look entirely unhappy!

There's already speculation that allowing banks to lend freely with risks assumed by the government is just going to get us into this same mess all over again, a few years down the road. From the Journal:

Moreover, blanket guarantees might inspire banks to take unnecessary risks, warned Frederic Mishkin, a Columbia University economist who stepped down as Fed governor in August. "You don't want to give a guarantee to banks that are in trouble" that might try to gamble their way out of problems, he said. He says offering broad guarantees will require that U.S. officials more aggressively act to sort out good banks from bad banks.