Somewhere in a dark corner of Massachusetts, probably in or very near a Dunkin’ Donuts, Michael Capuano is biding his time. “Just a few years, my precious,” he whispers to his chocolate glazed. “You’ll see. I’ll live to do an encore of To Me I Think They’re Illegal, for the hedge funds.” Meanwhile, in the Dunkin’ Donuts across the street, Barney Frank is sharpening his bonus-grabbing claws over a caramel latte, for lo, there may be much to grab after Timmy G.’s “Public-Private Investment Fund” works its magic…

Q: Yes, on the executive pay parts of this, the plan is to have passive investors not subject to that. But what about the asset managers? Will they be subject to any pay restrictions?

TIM: I’m going to answer this carefully. The basic answer is no. If you’re already an institution that’s received TARP assistance, then you would be covered by the conditions — the range of conditions that will apply to people who receive capital from the government.

But these programs are different programs. These are generally available programs. They’re designed — like our housing plan, like the small business plan — to get these broader markets working again. And for those reasons the comp conditions will not apply to the asset managers and investors in the program.

So! Perhaps members of Congress will entertain themselves by watching as hedge funds and other asset managers experiment with fun ways to game the toxic asset repurchase plan; perhaps they will ignore the whole confusing mess and reach for another doughnut. Either way, when the arbitrage pays off — and like blood, there will be arbitrage! — the sly asset managers will rake in their big fat cat paychecks and Congress will all of a sudden sit up and brush the crumbs off their shirts and start hollering about a hearing, and then everything will be pretty illegal in everyone’s opinion.

And, if you’re wondering, Tim Geithner’s job is now perfectly safe. In a couple of years the House Financial Services Committee will want to yell at the actual Treasury Secretary, not some former Treasury Secretary, for this.