Earlier this year, the government devised a plan to purchase bad assets from banks' books. This was actually the original idea behind TARP, which later changed to simply purchasing direct equity stakes in the biggest banks.

The plan to buy assets, called PPIP, or the Public-Private Investment Program, would marry taxpayer money with funds fro private investors, creating a vehicle that could scoop up all the toxic waste from banks' balance sheets. Because taxpayers would bear more risk than private investors, there were handsome incentives for private capital to participate.

That was the idea, anyway.

The combined funds behind PPIP currently stand at $4.52 billion, with private investors putting up just $1.13 billion, and taxpayers anteing up the rest. This comes after half of the original plan, run by the Federal Deposit Insurance Corp., appears to have been scrapped entirely earlier this year.

Now, $4.5 billion isn't chump change, but the original plan called for $100 billion in private capital to be leveraged into $1 trillion of buying power. In other words, six months after the plan was announced, it's not quite 0.5% of its intended size. Kind of pathetic, if you ask me.

And kind of irrelevant, too, when you consider the size of banks' troubled assets. Just looking at level 3 assets -- those assets banks have a hard time valuing, because there's no real market for them -- shows how immaterial $4.5 billion really is:

Bank

Level 3 Assets

Bank of America (NYSE:BAC)

$122 billion

Citigroup (NYSE:C)

$113 billion

Goldman Sachs (NYSE:GS)

$54 billion

Morgan Stanley (NYSE:MS)

$59 billion

JPMorgan Chase (NYSE:JPM)

$142 billion

This alone -- just five banks, and just level 3 assets -- comes to $490 billion. The dent $4.5 billion will make here is quite sad.

Market liquidity has roared back. Banks are raising capital. The panic is over. We're past the apocalyptic scenarios of earlier this year when this plan was first conceived ... for now, at least.

Some might be relieved, but PPIP looks like it's a failure, so far.

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Fool contributor Morgan Housel doesn't own shares in any of the companies mentioned in this article. The Fool has a disclosure policy.