$7B Ouch!

"Down and down we go, 'round and 'round we go..." The Dow goes down over 700 points, five major financial firms fail, credit markets get themselves in a knot and government largess gives away $700,000,000,000 of taxpayer money to help them get out of it. And, pundits are saying the reason the credit market is still non-functioning is that the banks don't trust each other right now. DUH! When y0u spent the last 8-10 years screwing each other with derivitives, mortgage backed securities and other packages containing crap, of course you don't trust the other guy, and they don't trust you!
Here's a thought. Rather than give the money to these firms by buying their troubled assets, why not just take them over and run all of them under a flagship United States Federal Bank, keeping their assets, both hard and soft, as collateral. Each new failure expands your market base and each becomes branches. The Bank keeps all fee income generated under the acquired banks account schemes in place at time of acquisition and applies it to the bailout account. All mortgage loans are rewritten to at least a 2% discount to help borrowers continue to pay and afford their homes and mitigate foreclosure activity. Management below senior management is retained to run the divisions with regulatory "managers" put in place to run the various regional divisions; this helps assure banking activities are on the level and provides ongoing oversight. Then, as the bank is showing stronger performance, chunks can be sold off to remaining healthy institutions, allowing them growth, market expansion and assuring the acquired assets and liabilities are reasonable and healthy. It also provides for growth to banks in a size they can accomodate, taking a smaller chunk rather than a whole business, such as BofA and Wachovia.
Sure, the government isn't in the business of running companies. Just bailing them out, as we've seen with Chrysler, AIG, etc. Why not get an equity stake in them; it works for Bershire Hathaway!