The public is currently terrified of owning anything with subprime exposure, and terrified of lending to banks that might be wiped out by such exposure. At the same time the public is desperate for the safety of T-bills and T-bonds, to the extent that T-bill yields fell almost to zero the other day and are still less than 1%.
If Treasury actually goes ahead with the $700 bailout plan, this is the essence of what will happen:
Treasury will give the public exactly what it is desperate for (by selling a slug of new T-bills and T-bonds), and in return take from the public exactly what it doesn't want (subprime mortgage securities). It shouldn't have any trouble accomplishing this if and when the authority is granted.
In the financial market the role that Treasury will be playing is traditionally the role of the speculator; the one who buys what no one wants in exchange for the cash that everyone wants. The problem many people have with this (myself included) is that the Constitution does not give the federal government the authority to be a speculator. That's what the private sector is for.