Since there is no “price to pay” for making all these toxic loans (as the Gov’t is going to buy them), who’s to say these greedy banks won’t go out and extend credit to anyone with breath?
Why would the banks want to get in the same fix they're in now, on the brink of bankruptcy? They of course will be be more cautious in their lending.
What we really need is for that lousy red-lining law which forced banks to sell sub-primes to be repealed. I'm sure all are agreed on that front. The banks will be first in line for reform there. But since Congress put the law into effect, Congress will have to be the one to change it.
In addition, stockholders who have lost fortunes in the decreased stock price (both institutional and individual investors) will hold banks more accountable to avoid losing future fortunes.