Why didn't they just do this?

Here's something that should actually help.

The Paulson Plan doesn't actually tackle the problem of banks unwilling to lend to one another and/or the related problem of banks hoarding cash. This crisis was supposed to be affecting "Main St." via companies having problems getting financing and having problems paying suppliers, employees, and their creditors. Because credit was getting to be so difficult to get, companies were going to have to make some tough decisions - probably leading to a lot of layoffs.

The Fed is now lending directly to corporations in what is called the commercial paper market. I'll try to post more later. I don't know the answer to the question posed above, but I'll try to give it some more thought.

If you are on the West Bank, I'll be participating in a forum this evening at 6 PM @ The Suite, 3580 Holiday Drive in Algiers (right off Gen. De Gaulle).