That would one of the potential outcomes...
Another would have the fedgov sell the shares in the market (depressing the price) in a controlled fashion - Like GM / AIG.
There is *nothing* good that comes out of this program in the end, unless you like socialism/fascism.
Those companies were already in ruins.
This proposal would kill the DOW. What would happen to healthy blue-chip companies that are relying on those stock values for their major capital projects?
These corporations would suddenly find themselves with under-water projects and no shareholder value to underpin them because of forced sell-offs at depressed prices.
The federal government will end up creating new GM's and AIG's overnight.
And who would buy back these stocks? Somebody has to be a buyer if the government is forcing 401(k) holders into selling. Would people be forced to sell their stock assets in 401(k)'s, only to buy them back at a lower price outside of a 401(k) structure?
This appears to be no different than when the Nazi's in 1930's Germany forced the Jews to sell their businesses at bargain prices or else face outright seizure.
-PJ