Listening to CNBC in the car, I heard an interesting idea as to what the markets (not the banks necessarily) want to solve the current financial crisis and it appears that it would probably be a better solution to the Paulson plan and could in the end cost us a lot less money.
The plan is pretty simple on its face, to set up a market to trade all $46 trillion in MBS that exist globally (obviously all $46 trillion worth wouldn't be traded). This would allow the markets to price these things (and effectively price real estate) and enable investors to take the risk of default/lower returns rather than the US government. The government's role in this plan would be to set up the initial market and to "force" companies to participate. The government would also obviously provide a backstop/FDIC for any institution that may be made insolvent through the initial pricing (like the JPM buyout of WaMu). In the end, this would not only cost us a lot less money, but would also be a good prevention against this problem from cropping up in the future, as home prices would have a real market (and a huge one) that would be much more transparent than what we have today.
This idea is completely counter the the Paulson plan, which in comparison looks much more like a bailout of the banks rather than a solution to the longer term and bigger problem.