The root problem of the mess in the economy is that housing prices are and remain too high.

The first two graphs are a year or so old but prices have not come down enough to rectify over-valuation.

And from a May 2008 paper published by the San Francisco Fed.

RTC II will attempt to re-liquify the financial system.  However, as I pointed out yesterday, increasing credit and lowering credit costs to alleviate falling and still overvalued home prices is tantamount to increasing margin lending and lowering margin rates as a response to falling technology stocks in 2001. There can be other positive effects to RTC II but it will not stop declining home prices.

Though RTC II is probably necessary, it will not halt deteriorating credit either.  If, in fact, the ultimate cost of the write-downs is $2 trillion, as Nouriel Roubini postulates, then RTC II will be overwhelmed if RTC II is capitalized with $500 billion as being suggested.