"What he should have proposed instead, many economists agree, was direct injection of capital into financial firms: The U.S. government would provide financial institutions with the capital they need to do business, thereby halting the downward spiral, in return for partial ownership. When Congress modified the Paulson plan, it introduced provisions that made such a capital injection possible, but not mandatory. And until two days ago, Mr. Paulson remained resolutely opposed to doing the right thing.

"But on Wednesday the British government, showing the kind of clear thinking that has been all too scarce on this side of the pond, announced a plan to provide banks with £50 billion in new capital ” the equivalent, relative to the size of the economy, of a $500 billion program here” together with extensive guarantees for financial transactions between banks. And U.S. Treasury officials now say that they plan to do something similar, using the authority they didn't want but Congress gave them anyway."

The NYTimes reported: "Having tried without success to unlock frozen credit markets, the Treasury Department is considering taking ownership stakes in many United States banks to try to restore confidence in the financial system, according to government officials.

"Treasury officials say the just-passed $700 billion bailout bill gives them the authority to inject cash directly into banks that request it. Such a move would quickly strengthen banks' balance sheets and, officials hope, persuade them to resume lending. In return, the law gives the Treasury the right to take ownership positions in banks, including healthy ones.

"The Treasury plan was still preliminary and it was unclear how the process would work, but it appeared that it would be voluntary for banks.

"The proposal resembles one announced on Wednesday in Britain. Under that plan, the British government would offer banks like the Royal Bank of Scotland, Barclays andHSBC Holdings up to $87 billion to shore up their capital in exchange for preference shares. It also would provide a guarantee of about $430 billion to help banks refinance debt."

Since the Bush regime and its flunkies, Paulson and Bernanke were complicit in causing this debacle,  it is imperative that Congress call a special session now and take the power out of Paulson's and his Treasury Dept. Bush loyalists and cronies' hands for this stage of the solution.  Appoint a strong ad hoc committee to oversse the distribution of funds and a robust oversight group to keep everyone honest.

There should also be a moratorium on foreclosures until the partial government ownership program is implemented and new bankruptcy rules can protect homeowners.

The groundwork will have been laid for creating a 21st century New Deal re-regulation of the entire financial system and morgage lending entities after January, 2009 to ensure that the Republican Great Depression and the Republican 21st century financial disaster never happens again.`