I am loving the Washington Post's coverage of this crisis so far.
I think other people have proposed this solution too: The underlying problem with the banking system is all these bad securities based on mortgages that people can't pay off. So...instead of giving all this money to the bankers, why not have the federal government pay off the bad mortgages?
In the 1930s, the Home Owners Loan Corp. reissued mortgages to one-quarter of American homeowners.
A new HOLC could pay off these distressed mortgages and give people 30-year, fixed-rate, low-interest loans instead. So it's not like they're walking away from their obligations.
"Like the administration's proposal, this plan would result in the government owning assets. But these assets would be real estate, not complex derivatives whose true value would take weeks to discern. Homeowners would become partners with the government in resolving the crisis."