All your banks are belong to U.S.

The latest news out of the bailout/rescue plan is that the Treasury Department and Federal Reserve might be planning on embarking on the Swedish Plan. Brad DeLong and Paul Krugman have both argued for some kind of recapitalization of banks by taking an equity stake since the beginning of the financial crisis... saying that buying off bad assets was not going to staunch the bleeding... what they need is some money, and what taxpayers need is some equity. I am, of course, not qualified to judge whether this is really the right way to go, but it sounds right to me.

The proposal resembles one announced on Wednesday in Britain. Under that plan, the British government would offer banks like the Royal Bank of Scotland, Barclays and HSBC Holdings up to $87 billion to shore up their capital in exchange for preference shares. It also would provide a guarantee of about $430 billion to help banks refinance debt.

The American recapitalization plan, officials say, has emerged as one of the most favored new options being discussed in Washington and on Wall Street. The appeal is that it would directly address the worries that banks have about lending to one another and to other customers.

Of course, the devil is in the details, and said details are sketchy at best... but this sounds like a promising use of that $700 billion, since I've always wanted to own a bank. Do you think I should buy a new suit?