Do read the article, but the gist is this: The Treasury will initially have $250b, and up to $700b, to buy either directly or via auction bad loans and assets from financial institutions, in return for warrants for equity. Compromise language includes disincentives for high CEO pay, additional congressional oversight, and a surprising requirement for the president "to submit a legislative proposal to seek reimbursement from the financial institutions that participated" if the value of the purchased assets yields a net loss.
The best analogy I can come up with to describe the crisis is the lemon problem, exasperated by mark to market accounting: Balance sheets are full of mortgage-backed or otherwise related assets, the popping of the housing bubble resulted in a revaluation of these assets, and capitalization requirements are driving banks to liquidate the assets. Enter the lemon market. Is the bank selling the assets because it needs cashflow, or because the assets are full of subprime contagion? Is this the firm's best or worst assets? The information asymmetry has snowballed to the point of credit market implosion. Thus the government's first solution, improving lending opportunities. When that was found insufficient, as the last few weeks have witnessed, we enter this second round, where the government actually buys the troubled assets.
It is hard to comprehend how dire this situation is as the economy still "feels" okay. Gas prices might be high, but unemployment is not at 30%. Yet while the societal ramifications are not as bad, the financial conditions are worse than those that kicked off The Great Depression.