There's lots of talk about needing to bail out Wall Street firms because of the credit markets, because of housing markets, because of the sky falling etc. But we tend to ignore the simplest solution to these problems.
Main Street would be better served by reversing many of the predatory lending schemes dreamt up by usurious financial industries, and by reducing the risks associated with starting up new businesses.
For example one might:
1.) Business loans - rather than give 700 billion to failed businesses, endow the SBA and various state IDAs to issue loans to businesses seeking loans at competitive terms. Earn money just like the failed banks should have. This removes the credit crunch by having the tax payer act as the creditor, while not rewarding failed financial institutions with cheap cash.
2.) Housing prices - rather than buy out bad debt, and allowing banks to foreclose on houses, simply adjust the rate of the existing mortgages to what the buyer could pay, extending the terms as necessary to cover the total ammount. Keeping houses off the market, even in foreclosure will shore up equity by preventing over-supply. For those loans that will take longer than 30 years to pay back, allow the Federally backed institutions to buy the mortgages and hold them.
3.) 401Ks - rather than try to prop up the stock market, to shore up these investments, legislate conversion to defined benefits plans. Repeal the tax loopholes that made 401ks attractive to corporations, and use the proceeds of #1 to increase Social Security payments for those who lost their savings.
4.) Taxation - increase capital gains by 5%, while lowering income tax by a like amount. Cap all salaries (and pensions) to 12x - 15x the base salary for all corporations, in order to encourage capital investment and payment of dividends.
5.) Medical care - endow Medicaid with the ability to insure working people of all income levels, offering preferential rates for self-employed and small business owners.
6.) Student loans - remove earnings and co-signing requirements for student loads. Allow each student to take on their own loan, and extend the period of repayment to lifetime if need be.
7.) Consumer Credit - fix the maximum APR of credit cards (to say 2-3x inflation), in order to pull credit out of the consumer market, and push it into the B2B and home sales spheres. This will hurt banks in the short run, but help Americans rebuild their savings in the long run.
Individually, any one of these changes would not have a major effect upon preventing the crash, but combined they would simultaneous increase tax revenues, stabilize Main Street's balance sheets, and encourage American industries to reinvest in capital improvements and long term earnings.
By increasing the size of the safety net provided to all Americans, individuals can avoid total financial collapse, while encouraging entrepreneurs to grow new businesses.
While the wealthy and Wall Street set might not like this set of recipies, as they would no longer beable to fleece the public with impunity, they really don't have a leg to stand on any longer.