Jerome a Paris suggests a different bailout idea: a National Investment Bank that would focus on helping people rather than banks. It would serve the following functions:

• allow bankrupt institutions in the existing financial sector to go bust without damaging the real economy by creating an entity able to step in to fund the real economy. In other words, even if banks going bust take other banks with them, there will still be a banking institution able to step in and provide credit to worthwhile business activity that was banking with failing institutions;

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• provide specific investment capacity for targeted sectors that will help the economy from the bottom up: (i) a programme to make buildings energy-efficient (via insulation, solar heating, etc …) , (ii) a public works programme focused on infrastructure, and in particular on public transport and the electricity grid, and (iii) a programme to develop investment on a large scale in renewable energy.

The bank could act as a direct investor in such activities, as a lender to other investors in such sectors, or as a distributor of subsidies to households for targeted local investment, and it would be easy to identify what money is spent as grants and what is done on commercial terms. Such a programme would help re-create activity in the construction sector, would encourage investment in manufacturing capacity in the relevant sectors by providing predictable demand for whole categories of goods, and would have easily understandable long term benefits in term of energy independence and the trade balance;

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• provide direct support to homeowners and lenders, when they have a direct, identifiable relationship, by helping to renegotiate terms that are bearable by the borrowers, and bridging part of the gap between the earlier terms of the mortgages and the new ones. This could provide enough support to limit to some extent the number of foreclosures and their attendant collateral damage on households, neighborhood and all the financial products built on top of these mortgages.