Under the proposed $250 billion plan, the Washington Post reports, there is a risk that banks will take the new government capital and use it to bolster their balance sheets but still not resume lending. The Treasury is not getting any specific contractual guarantee to prevent that from happening. The Wall Street Journal reports the move to partially nationalize the banks “intertwines the banking sector with the federal government for years to come and gives taxpayers a direct stake in the future of American finance, including any possible losses.” British Prime Minister Gordon Brown said the relationship between governments and markets is changing.

Gordon Brown: “What I think we’ve got to realize, that unless we build a global system of coordination and supervision, then we are as likely to have another crisis that starts somewhere else that we didn’t understand was happening, because we had no idea of the risks that people were taking. So I think it’s actually a new relationship between markets and government that we’re looking for.”

Paul Krugman, this year’s winner for the Nobel Prize for Economics, criticized the Bush administration’s handling of the economic crisis so far.

Paul Krugman: “Obviously, it hasn’t been enough so far, right? Things are getting worse. And I’ve been writing about that a lot. Yesterday was the first day I actually felt that policymakers exceeded expectations instead of falling short, that the actual decisions reached in that European summit were better than I expected. And so, that was favorable, and I’m feeling more optimistic today than I was, let’s say, Thursday. It looks like policy is starting to make more sense. But, you know, nobody knows where — I think we’ve clearly been on the wrong track up ’til now.”