The banks need breaking up.
The current drafts of the economic stabilization act will not prevent $ 700 billion to flow right back into the derivatives casino. Regulators worldwide treat a global crisis of the financial system as if it were the beginning of The Great Depression. However, it is the beginning of The Great Casino Bailout to finance $ 55 trillion in Credit Default Swaps (CDS) that is an unregulated market for high risk speculation (read http://money.cnn.com/2008/09/30/magazines/fortune/varchaver_derivatives_short.fortune/index.htm if you really want to be scared - thanks to my readers). The economy will not benefit from such a bailout and the financial markets won't be unfrozen. It just pays for bad debt.

If at all a bailout should be adopted, in addition to what's on the table, it would have to have conditions to protect the taxpayer from financing the CDS problem.

For starters, commercial, mortgage and consumer lending together with the customer deposits would need to be forced to be broken off the rest of the banking business. The deposit/lending part can be backed by the government and deposits should be guaranteed in full. The mortgage part could be supported with temporary changes in the accounting rules where values to maturity can be accounted for (this means that they are allowed to cook the books some more in the short term http://www.defazio.house.gov/index.php?option=content&task=view&id=441 ). This ensures liquidity pretty quickly as this part of the business is the core of a bank. However, the deposit/lending part needs tough restrictions in order that the money does not flow into the unregulated casino.
Secondly, the speculation part needs some teeth pulling, in particular, short selling should be outlawed outright and globally, immediately. Against mainstream economist believes, there is no economic benefit to this predatory Wild West money making. At first, it sucks the blood out of the economy only to be bailed out by the taxpayer when it goes sour.
Those two issues need addressing before the bailout is even to be discussed and it has to be done right away.
For recipients of bailout money (only pure deposit/lending institutions), tough restrictions on executive pay have to be mandated, not recommendations. And I mean tough (see "bailout act corrupt on inception http://www.ireport.com/docs/DOC-97787 ). In particular, those bankers that have taken home as much as $1 million to $ 1 billion per year while the unfolding problems were already apparent, including the board members need to return any unjust compensation. The issue of golden parachutes is to be dealt with an outright prohibition of any such compensation instead of just postponing payments. In the current proposal, they would still get the golden parachutes, just later.
Money is only to be given against the equivalent value of prime equity (not second class, non voting shares - that's an insult to the taxpayers).
For the Fed, oversight means tough measures not "by consultation" as proposed. It is a free pass for the Fed to do WHATEVER.
Please read more about the bailout's options in my other ireports. The current approach to the bailout is the WRONG thing to do. McCain and Obama are both wrong in doing just SOMETHING for the sake of showing action. The problem has to be understood first and it is not as "simple" as putting a fire out. However, isolating what needs to be made safe might be a better start. This is not an American problem. It is a global problem of a worldwide financial system that has been bringing YOUR money into the casino of weakly regulated derivatives.
Please comment. I will try to address your questions. I just arrived in Europe and try to see what it all means over here. Sorry for the choppiness, I am typing away in the passenger seat of a car.
H.R. Tschudi, economist and entrepreneur, Vancouver