In his article entitled “Stop the Bailout: Four Better Alternatives” Alan Quasha calls for  a paradigm shift in which we focus more on “re-engineering America” rather than doing than “shooting from the hip” and “throwing good money after bad businesses.”

Alan Quasha enumerates four alternatives which he believes can stimulate the economy without “mortgaging our grandchildren’s future.”

These four alternatives are:

1.    Allow the banks to fail through the vehicle of bankruptcy, and transfer the funds to successful banks.

2.    Leave the well-functioning banks while at the same time transferring “toxic” assets to a government vehicle which can then liquidate in an orderly fashion.

3.    Insist on the merging of weaker banks with stronger banks to consolidate them.

4.    Create and implement creative asset-insurance schemes to protect a percentage of the loss, perhaps above 10%, which would be kept by the banks. This would then pay for an insurance premium of non-voting preference shares. In order to make sure that the banks get their 1.4 trillion, the government should supply the capital pari passu with investors.

Alan Quasha makes several more suggestions, creating a comprehensive plan which is a realistic alternative to the bailout proposal. As Alan Quasha puts it:

“Now is the time for bold long-term thinking and short-term government activism. If done correctly, and if we can largely keep politics out of the investment process, the American people can benefit from potentially the greatest opportunity of this century and begin to endow their economic future.”