Give a 700 billion dollar tax rebate (that should be around 3,500 each tax payer if there are now 200 million tax payers) with the following caveat:

You must immediately deposit your money into one or more banks or financial institutions for at least 6 months before spending. You may electronically transfer any amount at anytime during this period.

The institutions will compete for their piece of the 700 billion.
Let the bad loans fail or folks like Warren Buffet may buy them at highly discounted values.

Another consideration:

Place a freeze on the paper money supply for 6 months. They (the FED) may not print up anymore money during this period.

This would be a bailout for “main street not wall street”, so the Democrats should be happy. It is also a “free market solution”, so the Republicans should be happy.
In addition, the taxpayer will not lose any money, unless they make a very bad choice or take a very high risk with their $3,500 investments over the next 6 months.

The FED did a bad thing by making interest rates artificially low.

… anyway, just a thought.

FYI – interesting take on the whole thing:
http://mises.org/story/3131