Taking an equity stake in a major bank isn’t new, either. In 1984, the government bought an 80% interest in Continental Illinois National Bank and Trust after bad loans in the oil fields of Oklahoma and Texas threatened to bring it down. Then one of the nation’s top-10 banks, Continental Illinois was viewed as “too big to fail” by regulators who feared chaos in the financial markets. Bank of America (BAC) bought the troubled bank in 1994.

Treasury Secretary Henry Paulson’s plan to inject $250 million into 9 major banks is a variation on the Reconstruction Finance Corporation of the 1930s. That agency made loans to distressed banks and spent about $3 billion to purchase stock in about 6,000 banks. When the economy stabilized, Uncle Sam sold the stock to investors or to the banks.

The idea was a good one, but the government moved too slowly to deal with the gathering financial storm - a lesson that Uncle Sam understands this time. The Federal Reserve has slashed interest rates and poured money into the banking system in an effort to restart routine lending and breathe life into consumer spending, autos and, one of these days, housing.

But once it's in the market, the government is sometimes too slow to get out. British Prime Minister Margaret Thatcher revitalized the British economy by selling off moribund nationalized industries, cutting regulation and opening markets to competition. Could it happen here?

The obvious question: when does Uncle Sam stop handing out goodies to companies deemed “too big to fail”?

On the other hand, a major failure – American International Group (AIG), for example – has the potential to pull down other sectors of the economy and the cost of doing nothing could be catastrophic.

Parlez-vous “socialiste,” mon ami, Monsieur Gekko?