Purpose

Shore up the American financial system and economy, with risk takers (such as the financial companies and the foreign and U.S. investors, management, and employees who freely chose to be involved with them) paying for their failed gambles, not the U.S. taxpayers.

The Plan

Insure Americans' savings, including retirement plans

• Savings and checking accounts:  Ensure the FDIC (Federal Deposit Insurance Corporation) and NCUA (National Credit Union Administration) have the temporary peak resources they need to keep insuring checking and savings accounts up to reasonable levels.  Cost to U.S. taxpayers = $0.  Cost to financial companies = insurance premiums.
• Investment accounts:  Nationalize the SIPC (Securities Investor Protection Corporation) so that, like the FDIC and NCUA, it's backed by the full faith and credit of the U.S. Government, with financial companies paying risk-based premiums so that it too has a net cost of $0 to American taxpayers over medium term time horizons. Ensure the SIPC has the temporary peak resources it needs to keep insuring investment accounts up to reasonable levels.  Cost to U.S. taxpayers = $0.  Cost to financial companies = insurance premiums.
• Money market funds:  Nationalize and make permanent the one year money market insurance plan so that, like the FDIC and NCUA, it's backed by the full faith and credit of the U.S. Government, with financial companies paying risk-based premiums so that it too has a net cost of $0 to American taxpayers over medium term time horizons. Make it a responsibility of FDIC or NCUA, rather than creating a new government agency.  Cost to U.S. taxpayers = $0.  Cost to financial companies = insurance premiums.
• Insurance:  Nationalize the separate state Insurance Guarantee Funds so that, like the FDIC and NCUA, they're backed by the full faith and credit of the U.S. Government, with financial companies paying risk-based premiums so that it too has a net cost of $0 to American taxpayers over medium term time horizons. Ensure the nationalized Insurance Guarantee Fund has the temporary peak resources it needs to keep insuring investment accounts up to reasonable levels.  Cost to U.S. taxpayers = $0.  Cost to financial companies = insurance premiums.
• Education:  To reduce panic, educate -- through a single unified campaign -- savings, checking, and investment account and money market holders about their FDIC, NCUA, SIPC, money market, and Insurance Guarantee Fund insurance rights.  Cost to U.S. taxpayers = much less than $700 billion.  Cost to financial companies = $0.

Reestablish financial confidence, liquidity, and credit flow

• Stop talking about the Great Bailout! This only serves to make the financial companies bury their heads in the sand about their failed gambles, rather than work them out.  Shatter their hopes and dreams that U.S. Government officials will steal money from U.S. taxpayers and hand it over to them.  Cost to U.S. taxpayers = $0.  Cost to financial companies = reality check.
• Empower the FDIC, NCUA, and SIPC to quickly sell off the assets (good and bad/toxic) of the failed --and proactively, the failing -- financial companies at real market prices, as they have been doing for years.  This not only creates liquidity and restores the flow of credit, but also is the only way to ensure we have strong next-generation financial companies in the American economy who know how to manage risk, among other things. Should there be a short term loss, it will continue to be repaid by financial companies paying risk-based premiums to the FDIC, NCUA, and SIPC so that there is a net cost of $0 to American taxpayers over medium term time horizons. Remember, Americans’ savings are insured during this necessary cleansing of weak financial companies failing.  However, the investors, management, and employees who freely chose to be involved with these weak financial companies will lose their gamble and pay the price, as they should.  Cost to U.S. taxpayers = $0.  Cost to financial companies = growth if well-managed; death if not.
• Raise the FDIC, NCUA, SIPC, and Insurance Guarantee Fund insurance limits to near unlimited.  This will end the flight of capital from financial companies that is occurring because, since the current insurance limits are much less than near unlimited, their largest account holders (businesses and individuals) are encouraged to withdraw their capital and spread it among an unmanageably large number of financial companies.  Cost to U.S. taxpayers = $0.  Cost to financial companies = insurance premiums.
• Let the Treasury and Federal Reserve continue to grease the wheels of liquidity and the flow of credit with the responsibilities and authorities they already have.  Establish better controls over the Treasury and Federal Reserve so that they do not sneak the Great Bailout past the rest of the U.S. Government and the American people by making short term loans that are too large relative to the low value of the high risk debt accepted as collateral.  Cost to U.S. taxpayers = less than the current cost because of the increased oversight.  Cost to financial companies = growth if well-managed; death if not.
• Educate financial companies to cut their dividends to preserve capital, and raise the interest rates and other incentives they can offer to attract capital.  Educate them to choose between making deals to survive, or failing.  Cost to U.S. taxpayers = much less than $700 billion.  Cost to financial companies = $0.

Preserve then increase Americans' wealth, including that in retirement plans and housing

Assumptions

• The bursting of the credit bubble, housing bubble, and financial-driven stock market bubble cannot be stopped, only slowed and made less chaotic. 
• We can choose to slow the bursting bubbles, or let them happen at their natural speeds. 
• Either way, we will reach the same bottom before we can rebuild (unless U.S. Government officials make it worse, as The Great Bailout would do).