The debate over how to mend the broken U.S. banking system has been ongoing for many months now and, as alarming as it may be, we still don't have a credible solution in the works. We have hope from a new president with a new economic team (albeit one without a leader yet, as Timothy Geithner is set to be scrutinized by Congress over whether or not he's suited for Treasury Secretary), but as we all well know, hope is not a plan.  

And even as this transition is underway, the urgency for a fix has never been greater. In recent days, we've seen more massive write-downs, additional bailouts, and risks of insolvency. Even one of the banks hired by the government to act as a custodian for the assets acquired by the TARP funds, State Street, appears to be on the brink of collapse. Its shares were cut in half yesterday after it disclosed much more dramatic losses on its mortgage-related assets than was expected.

The government's attempts so far have been ad-hoc. Save one bank, let another fail. Buy up banks' toxic assets, take equity stakes instead. Save the equity holders, save the debt holders. Flip, flop.

So far, nothing has worked. Warren Buffett recently pointed out that some of the decisions that ultimately got the country out of the Great Depression were criticized early on in much the same way the current attempts have been.

But there isn't time for patience. If Bank of America is nearly insolvent, as some claim it is, throwing more billions at it isn't much of a solution. So far, the government has injected $45 billion into the bank and committed to back more than $100 billion in loans. Its market capitalization, meanwhile, stands at just under $30 billion.

In recent days, the debate over how to thaw the credit tundra has reached a fever pitch among those in the peanut gallery. Bloggers, columnists, and pundits are all weighing in with opinions. Most professional money managers, bank executives, and legislators have remained uncharacteristically silent, underscoring the fact that there simply is no good answer.

Here are the options currently being bandied about:

—Stick with the equity purchase plan. Most advocates of this idea agree that the government should demand more accountability if it's going to continue buying stakes in the country's ailing banks. Treasury officials seem to agree. TARP head Neel Kashkari sent requests to 20 of the largest banks for monthly reports on their lending activity.

—Go back to the original plan to buy up toxic assets. FDIC chairwoman Sheila Bair refuses to let this plan die. Critics continue to point out the obvious, that the price of the assets is unknown and could wind up costing taxpayers. And think of the losses the government would have taken if it had bought them when the plan first was floated in September, based on the banks' fourth-quarter write-downs. There's no sign these markdowns will stop anytime soon.

This idea could come in the form of a government-owned "bad bank," which is reportedly being considered in the U.K. It's also similar to the "ring-fencing" plan that's currently already being implemented with Citigroup and Bank of America, where the government promises to backstop loans up to a designated value.  

—Continue doing some combination of both the equity stakes and the toxic asset purchase, as advocated yesterday by Dealbook editor Andrew Ross Sorkin. "It may not be popular, and it may take a while to work, but it's one of the few viable alternatives," he wrote.

—Nationalization. This idea is perhaps most controversial right now, but it's not clear if it's gaining traction in the blogosphere for any reason other than that it's controversial. There are no indications that the Obama administration would take this route, a route that proponents argue worked wonders for the Swedes when their banking system failed in the early 1990s.

Under this scenario, the government would stop injecting more taxpayer money into the ailing banks and instead take them fully under its control. Portfolio.com's Felix Salmon is an advocate of this plan, arguing that it's a simple and easy solution compared with the other messy options on the table.

Value investor Whitney Tilson is also a fan, but he adds that the structure must force debt holders to share in some of the losses. When the government put Fannie Mae and Freddie Mac into conservatorship, equity holders were wiped out while most debt holders were protected.

For Obama, of course, none of the above scenarios will sit well. But with the market down more than 300 points on his first day in office, investors are leaving him little choice but to select one option soon and risk criticism if it fails.

Again, welcome to Washington.