Surprise, surprise, surprise. Guess who the Paulson plan benefits?

Bank of America’s top credit strategy analyst says Paulson Debt Plan May Benefit Mostly Goldman, Morgan.

Goldman Sachs Group Inc. and Morgan Stanley may be among the biggest beneficiaries of the $700 billion U.S. plan to buy assets from financial companies while many banks see limited aid, according to Bank of America Corp.

“Its benefits, in its current form, will be largely limited to investment banks and other banks that have aggressively written down the value of their holdings and have already recognized the attendant capital impairment,” Jeffrey Rosenberg, Bank of America’s head of credit strategy research, wrote in a report dated yesterday, without identifying particular banks.

Many banks may not participate in the Troubled Asset Relief Program because they haven’t had to write down as much assets under accounting rules, meaning decisions to sell into the program would cause them to lose capital, Rosenberg wrote. Investment banks operate “under a mark-to-market accounting model while commercial banks hold assets at cost until realizing a loss (or until they reasonably expect one),” he wrote.

Even without sales by commercial banks and savings-and-loans under the program, the companies may be harmed as the disclosure of prices paid in the troubled-debt auctions force them to “hasten the pace” of their own losses, Rosenberg wrote in his report. Banks and insurers mark down certain securities and derivatives to market prices in their earnings reports, avoiding losses on others unless they deem the declines to not be temporary and provisioning against loans as they go bad.

Bank lobbying groups today asked Congress and the U.S. Securities and Exchange Commission to suspend a rule that forces companies to put a price on difficult-to-value assets such as subprime mortgages.

Here is a translation of that last paragraph: Banks are unhappy with the size of their bailout (of which they deserve zero), simply because Goldman and Morgan are getting a bigger bailout (of which they equally deserve zero).

Is it any wonder Paulson wanted his bill ramrodded through without debate?

1.8 Trillion dollar bailouts just do not go far enough these days. Everyone wants more.