Forget the bailout, start over: the New American Bank Initiative

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.