http://www.voxeu.com/index.php?q=node/3112
Fascinating solution by MIT economist Ricardo Caballero in which he proposes that the government guarantees that it will purchase some larger number of shares than currently are issued (double, for example) for some price higher than the current stock price (double, for example), in a period of time (five or ten years). It is likely this crisis will be over by then and the stocks will have rebounded by then, so it's possible the government won't have to pay anything. If they do have to pay, it'll be the same amount of money that they'd have to pay to capitalize the bank now, in present value terms.
I think his "alternative" solution, where only new shares get this bizarre form of insurance by the government, is probably the best in terms of preventing future moral hazard. That's actually not a bad thing, because you'd have to have offerings of a new class of shares, which gives all those idle bankers something to do and may even stem job losses.
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