The bailout of the US financial system isn’t working. The government’s rescue plan has fundamental flaws, including incentives that favor the failed firms, not the country as a whole. New ideas are needed. In “New American Bank Initiative: Removing structural flaws in the economic rescue,” Sal Khan and I propose a radically different plan–don’t prop up existing banks, take part of the $700 billion earmarked for the bailout, and capitalize a new financial system. Sounds crazy at first. But we’re in the midst of a crisis that requires bold, even drastic, action. Using the systems thinking that drives technology innovation, we lay out a simple, direct approach to re-creating our financial system in a way that benefits the taxpayers, and the country, and that doesn’t reward failure and irresponsible decisions.
David Leinweber will be speaking at the O’Reilly Money:Tech Conference, February 4-6, 2009 in New York City.