The plan essentially calls for injecting capital in the banks in exchange for equity (stock). It also calls for increasing the guarantees on despositors' funds.
Paul Krugman weighs in, favoring the British proposal:
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.I heard a similar sentiment on NPR's Planet Money podcast, with Wall Streeters voicing their opinions that if the government would simply guarantee ALL desposits and other forms of bank savings, the credit markets would get moving again.
Such a move is currently under consideration here in the US.
But we need to act quickly.