Funny, I could have sworn the whole idea of Treasury Secretary Tim Geithner's recent bank bailout plan was to help get rid of toxic assets gumming up banks' balance sheets.

Turns out, the joke might be on us. Again.

The Financial Times reports a handful of banks -- of recipients of TARP funds -- are considering becoming buyers of toxic assets, not just sellers.

Citigroup (NYSE:C), Goldman Sachs (NYSE:GS), Morgan Stanley (NYSE:MS), and JPMorgan Chase (NYSE:JPM) are all reportedly considering buying assets. Presumably, banks would buy assets from each other at inflated prices using the nonrecourse leverage the plan generously provides, as if this is simply some sort of profit-juicing gift they're entailed to.

The absurdity of this is mind-boggling. If assets simply swap hands between Wall Street banks, the same amount of toxic waste still clogs the banking system (albeit with most of the risk shifted to taxpayers.) The original plan was to sell assets to hedge funds and private equity funds so banks can restore confidence and raise private capital. Letting banks acquire toxic assets as a form of bailout is no different than passing out hypodermic needles at a rehab clinic.

When the plan was first announced in February, a Treasury press release stated its objective was "to cleanse [banks'] balance sheets of what are often referred to as 'legacy assets."

It takes a special kind of insanity to see how the words "cleanse" and "acquire" can mean the same thing, but hey, this is Wall Street and Washington. Brazenness apparently knows no bounds between these two.

Look, banks that are "too complicated" and "too big to fail" are simply becoming bigger and more complicated. Between Wells Fargo (NYSE:WFC) and Bank of America (NYSE:BAC) making mammoth acquisitions and now the prospect of banks buying assets from each other, we're heading down a road of multiplying and exacerbating risks.

Also, yeah, let's let the banks figure out what these toxic assets are worth: They've proven themselves really capable of managing and valuing them in the first place.

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Fool contributor Morgan Housel doesn't own shares in any of the companies mentioned in this article. The Motley Fool is investors writing for investors.