Buried down at the bottom of the Times article on the Obama bailout plan is this short passage …

Under the category of sticks, private investment managers are closely watching how the Treasury rolls out its “uniform stress test” for grading the health of banks. If the government takes a tougher line with more banks, it could force them to sell off more of their loans and take their lumps sooner rather than later.

Remember, the heart of the problem in the banking sector is not simply that a lot of the banks are probably insolvent, it’s that they’re not willing to admit it and government regulators are not forcing the point. Specifically, the banks are refusing to recognize steep losses on a lot of bad assets. If this stress test were to force valuing these assets at something like market values that could force the sorts of financial reorganization (i.e., bankruptcy and a period of government ownership) that is probably the only way out of this mess. That’s a big ‘if’. I doubt that’s the plan at the moment. But it’s a detail in the plan that might later be built on.

Bank bailout 3.0 rolls out at 11 a.m. ET, and the Senate votes on the stimulus package later today. That and the day’s other political news in the TPMDC Morning Roundup.

Well, maybe CNBC was wrong. The Times is saying that it’s a bit more of the ‘bad bank’ after all. And the big story seems to be that Geithner won out against what the Times refers to as “some of the president’s top political hands” who wanted tougher controls over the banks and less giveaways for the banks’ shareholders.

I think the power of President Obama’s presentation tonight speaks for itself if you saw it. (Below I’ve included his answer to the first question on the economy, which was the essence of the press conference.) There’s an important debate about the proper outlines of stimulus bill. But there’s little serious debate over whether a large bill, predominantly focused on spending, is necessary. And yet that’s what the Washington discussion has been about.

Yet the real key to understanding that press conference is in information that came out earlier today: two polls showing the public is overwhelming on Obama’s side in this battle (see Gallup and CNN). According to Gallup, 67% of the public supports Obama on the Stimulus Bill versus 31% for congressional Republicans. 58% of Americans disapprove of the Hill GOP’s stand on this issue.

What’s most striking about these numbers is the continuing disconnect between the mood of the capital and that of the country. For me, a lot of that is a product of how Washington continues to be wired for Republican control. A president, and particularly one like Obama, is the one person who is in a position to cut through that.