Senator Shelby (R-AL), has come out and said this entire bail out deal is fatally flawed. He claims to have over 300 Economists agreeing with him.

Richard Shelby is the ranking GOP member of the banking committee and what is more interesting is he used to be a Democrat and switched parties in 1994.

Shelby:

We ought to look at alternatives

and further said:

Package is Flawed From the Beginning

So, are there alternatives? There sure are!

We have some robust plans already written, ready to go.

Roubini, aka Dr. Doom has a complete 10 step plan, which is a mix of a an RTC, a HOLC and a RFC.

Hillary Clinton, Bernie Sanders also have plans in place, with Hillary, due to her Presidential bid, having a series of proposals fleshed out, thought out, vetted and even typed up.

Clinton:

I've proposed a new Home Owners' Loan Corporation (HOLC), to launch a national effort to help homeowners refinance their mortgages. The original HOLC, launched in 1933, bought mortgages from failed banks and modified the terms so families could make affordable payments while keeping their homes. The original HOLC returned a profit to the Treasury and saved one million homes. We can save roughly three times that many today. We should also put in place a temporary moratorium on foreclosures and freeze rate hikes in adjustable-rate mortgages. We've got to stem the tide of failing mortgages and give the markets time to recover

Billionaire George Soros has some interesting insights and suggestions.

Finding specific alternatives is quite tough. Sen. Shelby is obviously correct, many economists are raising red flags but in terms of putting together a comprehensive alternative, the results are more piecemeal.

Shelby in a Press Release:

Last Saturday Secretary Paulson presented Congress with draft legislation that would grant him sweeping authority to spend up to $700 billion in taxpayer money to buy illiquid securities. The stated goal of this scheme is to return confidence and liquidity to our credit markets.

I do not believe this is the right approach. We did not get into this situation in a matters of days, and we are not going to fix it in a matter of days.

Proponents of the Paulson plan are telling the American people we can solve this problem with a single bill. I don’t believe that is credible. We have a number of interrelated problems that need to be addressed in order of their significance. First, and most urgent, is liquidity. Then we must address the solvency of our financial institutions and declining home values, not to mention our entire regulatory structure.

I believe Congress can address the liquidity issue by increasing the combined resources of the Federal Reserve System and the Treasury. By enhancing the Federal government’s existing lending facilities and guarantee programs, we can help stabilize money market funds and provide loans to troubled financial institutions without exposing taxpayers to massive losses.

Thereafter, we must determine how to address the troubled assets on the books of financial institutions and continue the process of dealing with declining home values. This will likely be a long and difficult process. We must recognize that now.

Even if the Paulson plan works perfectly, which many doubt, including nearly two hundred economists, it will not stimulate new lending, stop de-leveraging, help distressed home owners, or jump start the economy.

The next Congress is going to have to do more to address this crisis and we have not made this clear to the American people. As a member of Congress, I’m concerned that we are being asked to ratify the Secretary’s plan without having given meaningful consideration to any alternatives. This I can not support.

I find this astounding actually since the modeling of a solution based on HOLC, RFC, RTC and so on is really a Democratic solution, but hey, if someone bothers to get something that will work that's great.

The Question is What Alternative Will He Back to Address those Toxic Assets?

One of the biggest problems are the pricing of the toxic assets to be liquidated that is causing the credit market to freeze (Jesus, I'm sounding like a finance head, I'm not one! Full disclosure!)

I'm not so sure his ideas are the solution either, especially putting off the creation of some sort of RTC/RFC/HOLC to stem foreclosures now. I have no idea if the liquidity crisis with his proposed solution would work. Now that Shelby has issued a press release, hopefully these same economists will devour it and comment.

One must ask themselves if all of this is going on, why in God's name are Democrats ignoring Clinton's plans and these other economists to deal with the toxic asset pricing problems?

Final comment. Don't shoot the messenger and I'm not talking about myself here, an obvious leftie writing about a conservative who I disagree with on almost every issue....for it's the policy stupid.

Here are the main points of these 300 Economists:

1. Its fairness. The plan is a subsidy to investors at taxpayers’ expense. Investors who took risks to earn profits must also bear the losses. Not every business failure carries systemic risk. The government can ensure a well-functioning financial industry, able to make new loans to creditworthy borrowers, without bailing out particular investors and institutions whose choices proved unwise.
2. Its ambiguity. Neither the mission of the new agency nor its oversight are clear. If taxpayers are to buy illiquid and opaque assets from troubled sellers, the terms, occasions, and methods of such purchases must be crystal clear ahead of time and carefully monitored afterwards.
3. Its long-term effects. If the plan is enacted, its effects will be with us for a generation. For all their recent troubles, America's dynamic and innovative private capital markets have brought the nation unparalleled prosperity. Fundamentally weakening those markets in order to calm short-run disruptions is desperately short-sighted.