[lbo-talk] my bailout plan

[SA]

The banks need to be recapitalized. But the Paulson plan is an outrageous
giveaway. Here's a better plan. Lets say the banks need $700 billion -
that's 30% of the total market cap of the financial sector. But nobody wants
to invest and the banks don't want to be invested in. So in my plan, the
government forces the banks to sell stock to the taxpayer using a mechanism
similar to a cap-and-trade system:

1.  Each financial company is required to sell the government an amount of
stock equal to 60% of its market cap as of some past date.

2.  However, the government also distributes to each financial company
"waivers" equal to 30% of its market cap as of that date.

3.  A market for waivers is established. Companies with extra cash buy
wavers from cash-strapped companies.

4.  The outcome of trading shows which companies need the extra capital and
which don't. The companies that are left with the largest capital-raising
requirement are exactly those companies that needed the money. The companies
that didn't need the money in the first place aren't required to raise any
capital. And no matter what happens, a total of $700 billion gets injected
into the system.

SA