Neel Kashkari needs help. This 35 year old Goldman Sachs banker--barely six years out of graduate school--has just been handed $700,000,000,000 to spend. Henry Paulson, US Secretary of the Treasury, appointed Kashkari on October 6 to head up the Office of Financial Stability, which was hastily thrown together to manage the Wall Street bailout that Congress approved just the week before. The hope is that by throwing money at the banks, the economy will somehow regain its footing and the worst financial disaster since the Great Depression will be avoided. It is a lot like pushing a train wreck off a cliff in the hopes that it will magically get back on track.

Kashkari publicly admits he has no silver bullet, no solution. He is throwing the dice just like his boss and Ben Bernanke over at the Federal Reserve. Bernanke alternately bailed out Bear Stearns, bought up Fanny and Freddy, refused Lehman Brothers, then flip flopped again to rescue AIG. He's shooting from the hip. Even though it is long since the United States has enjoyed a true free market capitalist system, the market does still know a thing or two and it spoke loudly in response. Kashkari had been on the job less than five days and the DOW plummeted over 2000 points. Central banks around the world, desperately pumping money into their economies, are so far failing to stem the ruinous tide. We are going down for the count.

It should be obvious even to Harvard MBA's that throwing money at the banks is not a viable solution. The markets need confidence, not cash. That's exactly what Robert Reich, former Secretary of Labor, said last month. Putting a Wall Street banker like Kashkari in charge of getting us out of this mess is like appointing an arsonist to head the fire department.

Barack Obama has called for renewed regulations, which John McCain's finance adviser Phil Gramm spent his US Senate career dismantling. Obama is right, but this is closing the door after the horse has already left the barn. Still, new regulations should be enacted. This time we should demand that instead of telling the financial industry a few things they should no longer do, any new regulations we devise should specify the only things they will be allowed to do. This will circumvent the clever but unscrupulous bankers and brokers who invented the virtual investments that have demonstrated they have no clothes. A solid baseline of just exactly what will be allowed will provide more confidence to the markets than any slick schemes or bundles of billions. New regulations should include:

1. Fixed rate mortgages. No more balloons, adjustable, bait and switch, or surprises.

2. Fixed minimum down payment. This may delay many first home buyers but it will encourage more savings and thus more real money in banks for lending.

3. Proof of income. It is madness to sign a mortgage that consumes more than 25% of a borrower's monthly income. Yet some homeowners today are spending over 50% of their paychecks just to cover their mortgage. These are the ones who cannot make payments and therefore fuel the foreclosure cycle.

4. No second mortgages. If it is madness to sign a mortgage that consumes more than 25% of a borrower's monthly income it is beyond madness to assume a second mortgage on the same property.

5. Mortgages are not for sale. Mortgages may not be sliced, diced, packaged, or resold. If the original holder of the mortgage is bought out by another institution, that institution must take on the mortgages of the original holder as they exist without repackaging.

6. Guarantee savings. Fortunately, enough senators and representatives listened to their constituents and forced the government to include in the bailout bill a provision to insure savings up to $250,000. This addresses regulations going forward.

Where should Kashkari spend the $700 billion he just got? Obviously, he should not reward the greedy bastards that propelled us into this financial pit [which he is proceeding to do--ed.], but neither should he reward the stupid people who got themselves in over their heads. There are four sectors that warrant the highest priority:

1. County assessors. The housing bubble overpriced many homes way beyond their reasonable value. In most cases the mortgage value is way above the assessed value for property taxes. Kashkari should fund county assessors to validate the assessed value of mortgaged properties in danger of foreclosure and force the mortgage holder to bring the loan in line with the assessed value either by settlement or court action.

2. Down payments. For those homeowners who could meet a reasonable fixed rate at the reassessed value if they could meet a minimum down payment, Kashkari should pay the down payment. Sure, this would result in a windfall for many small homeowners but that is better than bailing out a few multi-millionaire bankers. There will be folks for whom reassessment and down payment bailout still will not allow them to retain their homes. They will be foreclosed because they are in way too deep for help.

3. Small business. Meeting payroll is the second most important priority for small businesses after customer satisfaction. Small businesses, not big corporations or Wall Street, are the cornerstone of the world economy. Kashkari should fund the Small Business Administration to guarantee the legitimate payroll and benefits requirements of small businesses for their employees.

4. Farmers. Farming is a dicey business that depends heavily on the weather but is key to feeding the people. Kashkari should fund farmers growing food--not ethanol crops--for the coming year to keep food prices low while the population recovers from the financial melt down.

One more thing the government should do is to recapture the golden parachutes from these CEO's and wealthy executives who basically ripped off their companies and their shareholders when they abandoned ship. Alan Fishman was CEO of Washington Mutual for only 17 days and he jumped ship with $20 million when his company entered a forced sale to J. P. Morgan. Savings and checking accounts were safe, but all the employees and others who invested in Washington Mutual stock were left holding the bag. All the golden parachutes from the last five years should be returned to the companies from which they were taken. Judging from the depths to which the financial institutions of the United States have crashed, not one of these executives is worth the money they absconded.

These measures are bottom-up solutions to the financial meltdown. These measures address the problems on Main Street. There will be winners and losers as there will be under any solution. These measures, however, will protect the many little people instead of rewarding the few so-called "masters of the universe" on Wall Street. When the AIG executives were "rescued" by the Fed this summer, they went on a million dollar pleasure retreat--and when they received another infusion of cash, they did it again! These fat cats don't need a bail out, they need to post bail before going in the slammer.

By contrast, if Kashkari builds a better bailout based on the regular folks on Main Street that includes some or all of the measures suggested here, America can recover from this Bush disaster and rebuild a slower but sustainable economy. Copyright 2008.