The follically challenged Herb Allison is likely to take over from Neel Kashkari, the former Goldman Sachs Group (NYSE: GS) banker who brought his shiny pate to Congress to get kicked in another part of his anatomy as the Troubled Asset Relief Program (TARP) continued to frustrate almost everybody. If approved, Allison's formal title will be assistant secretary for the Office of Financial Stability which administers TARP. Under former Treasury Secretary Hank Paulson, TARP went from being a way to buy toxic assets to a source of capital for big banks -- whether they wanted it or not.

Now, Treasury Secretary Geithner wants to revive Paulson's original idea to the tune of a deeply flawed $1 trillion program to further enrich a handful of billionaire hedge fund and private equity honchos. And Geithner appears to have selected a very cold fish for that job -- former Merrill Lynch executive Allison -- a Yale philosophy major and Stanford MBA who lost out on the CEO's chair at Merrill Lynch a decade ago to the far more stock-broker-friendly David Komansky.

GM's (NYSE: GM) sales of its Allison transmission unit show that risky debt is getting harder to come by. Private equity investors buying the unit for $5.6 billion are delaying the sale of bonds due to lack of interest.

According to The Wall Street Journal [subscription required]: "The deal is being financed by $3.5 billion in corporate loans and another $1.1 billion worth of junk bonds." Lehman (NYSE: LEH), Citigroup (NYSE: C), and Merrill Lynch (NYSE: MER) were planning to sell the bonds to institutional investors. So far, the demand has not been there.

If the investment houses cannot sell the bonds, they will have to hold the debt themselves.

As Wall St. does more and more high risk/junk debt deals and investment banks take on more risk financing the deals themselves, investors should be worried about the future consequences. If savvy institutions do not want the debt, why would it be prudent for the bankers to keep it? For deals already in the pipeline they have an obligation, but that will probably mean that their appetites will disappear soon.

And, that means that the next deal that looks like Allison won't get done.

Douglas A. McIntyre is a partner at 24/7 Wall St.