When the Bush administration submitted its three-page bailout proposal to Congress, taking equity positions in financial institutions was not included. Congress added it, hoping to recover some of the public's investment through the appreciation of shares companies would exchange with the Treasury Department for their illiquid assets.

Now this potent tool has become the centerpiece of the bailout effort, as well it should. We are dealing with a massive deleveraging, and more bang for the taxpayers' buck can be achieved on the constricted equity side of institutions' balance sheets than on the bloated asset side.

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