A Better Bailout?

I'm not sure if my office is typical in how freely we talk about politics, but the bailout proposal has dominated our lunch conversation lately. What's interesting is that no one I know, and I mean no one, is in favor of this thing.

Along with our own Representative Scott Garrett, the skeptics are getting more press and growing louder:

"It's a tough sell to most of our members," said Rep. Tom Davis, R-Va., after a closed-door meeting with Paulson and Bernanke. "It's a terrible plan, but I haven't heard anything better."

There are a lot of plans out there, and most that I've read or heard are better than putting $700 billion in the hands of those that mismanaged the funds they had. Here's one we talked about at lunch, and while I can't take credit for it, it's an alternative that may appease those concerned about throwing more taxpayer money down a pit:

1. Let the stupid and greedy fail. That's the way capitalism is supposed to work; there are consequences for bad choices.
2. Make the $700 billion available to small banks who didn't get stupid and greedy. This would give them the capital they need in order to meet a greater demand caused by the failure of the stupid and greedy. It rewards discipline and it also would be repaid to taxpayers with interest.
3. Eliminate the tax incentives for being stupid and greedy.

It's far from perfect, but it's an idea. There are options out there, and Congress must consider them all before putting taxpayers on the hook. My hope is that the President's awful image among the American voting public, and general belief we can't trust the guy, will doom this plan when he goes on TV to sell it tonight.