"The fundamental causes of this crisis are simply mortgage defaults"

Another different approach from TARP on Vox by Riccardo Cesari. TARP won't work because it doesn't attack the root cause of the crisis:

"The fundamental causes of this crisis are simply mortgage defaults, the poisoned windfalls of both credit deregulation, allowing lending of no-quality (no-doc mortgages) and financial deregulation, allowing for wild securitisation with abnormal leverages (up to 4000%), and retail selling with no transparency to worldwide individual savers who are, ultimately, the lenders of last resort of the system."

Here's the plan:

"Therefore, a truly effective Troubled Assets Relief Programme must defuse the two real causes of the crisis by 1) re-regulating the markets (what Paulson did not do in the Blueprint for Regulatory Reform, last March) and 2) helping households unable to manage their real estate debt (what Paulson did not do in September)."

Read the entire article.

Here's the blueprint. Here's one proposal dealing with mortgages:

"Mortgage Origination Process

Another issue that needs attention is the mortgage origination process. Simply put, that process was broken. We are aggressively addressing the immediate problem, working to increase the availability of affordable mortgage financing, prevent avoidable foreclosures and to minimize the economic disruption of the housing downturn. We concluded that it was also appropriate to put forward a proposal to address the policy issues arising from the current turmoil, to avoid a recurrence of recent events and to respond to the fact that a very large percentage of the problematic subprime mortgages originated in the last four years were originated by state-regulated entities.

Mortgage origination is one of the best case studies for the importance of regulatory structure. It raises the question of proper balance between federal and state oversight, and requires a balancing of innovation, consumer choice and expanded access to credit with protecting consumers from predatory lending and deceptive or incomplete disclosure practices. I have reviewed and analyzed a number of ideas to deal with this process. We thought quite seriously about federal preemption of enforcement authority but concluded in this case it was best to focus on the immediately achievable.

We are recommending retaining state-level regulation of mortgage origination practices, but we are also recommending creating a new federal-level commission, the Mortgage Origination Commission. This commission, the MOC, would be led by a director appointed by the President."

It's quite long, maybe I'll work more on it later. It's interesting.

As for point 2, maybe the Freedom Recovery Plan would work.