Reliable sources indicate that the Treasury Department is not, in fact, quite as understaffed as the total lack of subcabinet officials would suggest. A bunch of people are more-or-less in place, working in the building, as “counselors” while the vetter scrub their tax records. But today we get our first official nominees:

Today, President Obama announced his intent to nominate the following individuals for key posts at the Treasury Department: David S. Cohen, Assistant Secretary of Treasury, Terrorist Financing; Alan B. Krueger, Assistant Secretary of Treasury, Economic Policy; and Kim N. Wallace, Assistant Secretary of Treasury, Legislative Affairs. Each of the nominees is currently serving as a Counselor to the Secretary of Treasury.

This is good. It’s important to have official nominees in place because even though “counselors” can do a lot, they can’t represent the department on official business or speak with authority in interagency discussions.

Meanwhile, this still leaves what I would consider to be the three most important positions—Deputy Secretary, Undersecretary for Financial Institutions, and Undersecretary for International Affairs—vacant.

Over the past 60 hours or so, I’ve increasingly gotten the sense that the Obama administration’s problem with a “Swedish” solution to the banking crisis has less to do with the ideological/managerial concerns that I’ve heard raised and more to do with the simple fact of cost. Nationalizing the banks and then having the federal government take responsibility for their debts could easily entail disbursing over a trillion dollars. The nominal sum involved in Sweden was, of course, much less than that because it’s a smaller country but the point is that even though their plan did work is did cost a fantastic amount of money relative to their GDP. It’s not at all clear that the administration would be able to get congress to agree to appropriations on that scale.

Under the circumstances, it’s understandable that the Obama team is trying to come up with something cheaper. The problem is that what they’re coming up with doesn’t seem to be convincing anyone. And the main alternative to nationalization as a viable rescue plan—the good bank / bad bank scenario Alan Blinder lays out in The New York Times—only exacerbates the cost problem because it makes it harder for the government to recoup anything on the upside. Nationalization and good/bad are very similar, structurally, except in a good/bad scenario the government doesn’t own the equity in the good banks and thus can’t sell them to anyone. It’s a taxpayer gift to the existing equity holders, with the presumed advantage being apolitical management of the resulting banks. But whatever you think of that proposal, it doesn’t get around the fact that you would need a huge sum of money to do it.

So I’m not exactly sure where this leaves us. But I am sure that it’s a lot easier to call for sweeping measures and giant expenditures than it is to contemplate a legislative strategy for making such measures possible.

A very interesting Gershom Gorenberg post makes the case that AIPAC has bigger worries in the much-delayed trial of two former AIPAC staffers accused of passing classified info to the media and the Israeli government than the actual fate of the defendants. In particular, he makes the point that a trial might reveal the extent to which AIPAC was working hand-in-hand with the Netanyahu administration back in the 1990s to help subvert the peace process.

That, in turn, is a reminder of a crucial policy error from that period that we can ill-afford to repeat, namely the Clinton administration’s habit of acting in public as if the Netanyahu government was more reasonable than they really new it to be. There was a lot of private frustration, but for essentially political reasons very little of that frustration was allowed to seep out into public view. In the end, that approach didn’t achieve very much substantively and helped wreck U.S. credibility in the Arab world.