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The following plan was put forth by a friend of Sal Khan of Khan Academy back in 2008. Basically his idea was that instead of pumping more money into the black hole of the current banking system that got us into the mess in the first place, create an entirely new financial system by creating several new banks with a five year backing by the federal government and give them the bailout money. Give each man, woman, and child in the nation one share of each bank. So say 50 banks are created, one in each state, each with like 300 million shares given to the public, and they are given the 700 billion(which only 100 billion may have been needed in Sal's opinion), so say 2 billion to each bank at 100 billion bailout. These banks would have a clean slate and wouldn't have the need to hold the cash against past bad investments. With the five year backing of the federal government and clean slate, people would want to put their money in these banks. Instead of having a handful of banks that are too big to fail located in pretty much one geographical region of NY, it creates 50 banks spread across the nation. It eliminates the dilemma where banks can say hey why not go after the high risk investments with the potential of high returns as the government will just bail us out if the risks materialize.
The Bailout videos at the below link goes over the Paulson and Sal's friend's plan.
https://www.khanacademy.org/economi.../bank-bailout/v/bailout-14--possible-solution
The Bailout videos at the below link goes over the Paulson and Sal's friend's plan.
https://www.khanacademy.org/economi.../bank-bailout/v/bailout-14--possible-solution
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