Alternative to the Geithner Plan: New American Bank Initiative

Sal Khan offers one potential solution in which the currently insolvent zombie banks are cut out as middlemen in the flow of capital from the government to the private sector :  the New American Bank Initiative.  Briefly, Khan proposes to set up new banks (with clean balance sheets) with the 700 Billion dollars that the TARP program received.  Since the new banks do not have to worry about write-downs associated with bad loans and toxic asset-backed securities, these new banks can start lending immediately.  As an added benefit, each household would receive shares in the new banks...so at least the taxpayers would stand to get some direct benefit from their financing of the plan.

You can read the full plan here:  http://cift.haas.berkeley.edu/nabi-intro.html