For a critical look at what’s being proposed, it’s worth looking at Sebastian Mallaby’s piece in the Washington Post today. I wouldn’t agree with everything he says (in particular, there’s still a strong argument for pre-emptive measures, if ‘pre-emptive’ is really the word at this late date), but the argument for the government temporarily purchasing direct stakes in the banks has quite a bit to be said for it. Note Mallaby’s reference to what Douglas Elmendorf of the Brookings Institute (I know, I know) has to say. You can find it here. Again, it’s well worth reading. Take a look too at what the Swedes (I know, I know) did back in the early 1990s (very brief summary here) when their banking system ran into not entirely dissimilar difficulties.
As I said, food for thought.