In the WSJ’s “Political Diary” (not online): “Mr. Paulson’s motives nonetheless were laudable — involving the legislature in the ongoing Fed/Treasury bailout efforts would certainly be a legal and political nicety. But it’s not a necessity. There are plenty of other ways without going through a politically charged vote in Congress. The goal here is restoring confidence in the banking system while finessing any concern about suddenly rendering banks fat and healthy with an accounting rule change. Here’s one idea: Let banks contribute their dodgy mortgages to a government sponsored enterprise and receive in return preferred shares that would count towards their capital ratios. Fannie and Freddie, in fact, would serve nicely — they’re already in government hands and already eligible to issue preferred shares to the government representing nearly 80% of ownership. Just transfer those shares to banks in return for their mortgage assets (and, of course, let banks value them on their books at whatever value the government assigns to the mortgages they were traded for).”