There was a good article posted here a couple of days ago (can't find the link now) that argued that the difference is that the government can afford to buy the assets at above the market rate, because they can take a long-term view and hold them to maturity. The banks can't do that, though, they must value at market value and need to be able to trade them at a reasonable rate. The question then, of course, is how to estimate the hold-to-maturity value.

Buying them up at market rate, as you say, would just make all the businesses fail. The whole problem is that the market value is almost certainly not an accurate indicator of the intrinsic value of these investments at the moment.