On another blog I responded to a challenge to describe an alternative to the approach Obama has chosen with Larry Summers and William Geithner. What I said there (with a little modification and expansion) is worth repeating here:

1. (After firing Summers and Geithner,) I would appoint Kansas City Fed Chief Tom Hoenig, who said that the "too big to fail" doctrine was a failure, as Chief Economic Advisor; and UMB President William Koenig, whose bank was well managed, avoided toxic debt instruments, and turned down Tarp money, as Secretary of the Treasury.

2. I would charge them to implement an FDIC/RTC style receivership plan immediately, to rid the banking system of toxic assets.

3. I would also charge them to implement the "good bank" proposal of William Buiter, by which capital is poured into new or existing good banks for future lending.

4. I would authorize $1 billion to hire lawyers and accountants to pore over Wall Street's and mortgage brokers' books, and institute mass prosecutions of any engaged in fraudulent activities, together with a requirement of disengorgement of phony profits.

5. I would institute a clearinghouse for CDO's to immediately get a transparent, free market to set an evaluation for them.

6. I would request that Congress pass a law voiding all Credit Default Swaps in which the insurance being bought was not on behalf of a party requiring that insurance for its direct business purposes, with the return of the deposit to the counterparty, for any event that had not yet happened.

7. Any financial institution deemed "too big to fail" would be broken up using antitrust laws.

8. I would request that Congress pass a law requiring that all debt or leverage of any sort being used by any business be reported to the FDIC (the purpose being to find out how much debt and leverage is in the system), and give the FDIC authority to rein in debt and leverage.

9. To deal with future "regulatory capture" such as the Bush Administration's SEC and Alan Greenspan at the Fed, I would have Congress pass a law vesting a sufficient number of States' Attorneys' General (e.g., half or more) the right to bring an Action in Mandamus in Federal Court to force Federal agencies to enforce existing laws and regulations, or else allow the States to enforce them until the Federal agency does its job.

That ought to make a nice start....