Instead of buying trash from Wall Street, lend them money and charge interest...

[Eric J in MN]

...says Carnegie Mellon Professor Allan Meltzer:

And if they're going to do something, then what they ought to do is make loans, which the financial institutions have to repay with interest. And if you think -- that's an idea which the Chileans have used in a bigger crisis than this for them in 1982, and it worked for them.

People paid back the loans. They weren't allowed to pay dividends until they repaid the loans. They weren't allowed to take bonuses until they repaid the loans. I think that's the way -- if we're going to do this, then that's the way we should do it.

http://www.dailykos.com/story/2008/9/24/133422/858/388/608797

[RedEarth]

1. I sure agree with that....

[BuyingThyme]

2. Yes.

Why didn't I think of that?

[Yavin4]

3. The Loans Won't Be Paid Back

The assets are worthless.

[Eric J in MN]

4. If a corporation borrows money and doesn't pay according to the terms...

...then the corporation can be sued.

Most big investment banks have some worthless assets, but they also have plenty of valuable assets.

[Yavin4]

6. They'll Just Declare BK

and float away.

"Most big investment banks have some worthless assets, but they also have plenty of valuable assets."

The big problem is that the worthless assets are far larger than the valuable ones.

If you have $100K in your bank account, but you owe $750K, then you're insolvent.

[Eric J in MN]

7. When a corporation declares bankruptcy, its assets can be seized.

Most corporations have debts, but most corporations don't declare bankrutcy, and so it can't be that great for a corporation.

[conscious evolution]

5. And when they are late with the payments

jack the interest rate up to 29.95% like they do to us when we are late making a credit card payment.