WASHINGTON — The new bank rescue plan landed with a thud on Wall Street.

Treasury Secretary Timothy Geithner announced a plan that could send as much as $2 trillion coursing through the banking system and the broader economy, and stressed the government would act to stop "catastrophic failure" of financial institutions.

But investors fretted that the government was nowhere near untangling the crisis that has paralyzed the financial system and hammered the economy. As a result, Wall Street suffered its worst day since Dec. 1.

"The good news is they are going to spend a trillion dollars," said James Cox, managing partner at Harris Financial Group. "The bad news is they don't know how."

The administration called it the Financial Stability Plan, abandoning the old TARP, or Troubled Asset Relief Program. And while it may have a new name, investors were also quick to point out a whole new set of problems.

Besides worrying the plan is too light on details, Wall Street seemed concerned it does not solve the problem of how to get the soured mortgage-backed assets off banks' books — the heart of the crisis.

Asked about the negative investor response, President Obama told ABC News that Wall Street "is hoping for an easy out on this thing, and there is no easy out."

For now, the Obama administration says it does not need more than the second $350 billion chunk of the bailout fund, but it concedes that may change.

"We are going to have to adapt our program as conditions change. We will have to try things we never tried before," Geithner said. "We will make mistakes. We will go throughout periods in which things get worse and progress is uneven or interrupted."

The new approach aims to use both public and private cash to buy soured assets off the books of the banks. But the plan provides almost no detail on how the assets would be priced — only that it would be left to the private sector. Pricing the bad assets is key, in part because pricing them too low would force banks to take devastating writedowns.

It's far from clear that the government approach, using federal loans to entice private buyers to take the soured assets, will work.

"Most fund managers see these assets and don't want to touch them," said Christopher Whalen, managing director of Institutional Risk Analytics. "They can't sell them."

The government will also use some of the bailout cash to try to kick-start as much as $1 trillion in lending — hoping that getting the private market for bundled loans humming again will unlock credit in the rest of the economy.

Geithner also wants to put all banks with more than $100 billion in assets through a "stress test" to determine whether they can handle the losses that could come from an extended economic downturn.

But details on that part of the plan were sketchy, too, and some observers worried that the process would be messy. It also raises legal questions about what would happen to banks that refuse to participate.

"Let's say they do a stress test and conclude that a bank is insolvent. The bank could say, 'No, that's not the case and we're going to challenge you,' " banking analyst Bert Ely said. "There's a potential for a lot of litigation."