Maybe this was what that phone call between the President and Warren Buffett the other day was all about:

On Thursday, Berkshire Hathaway, run by Mr. Buffett, announced plans to invest $5 billion in Bank of America, a vote of confidence for the beleaguered financial firm.

The conglomerate has agreed to buy 50,000 preferred shares that will pay a 6 percent annual dividend. Bank of America has the option to buy back the shares at any time for a 5 percent premium. According to CNBC, Mr. Buffett approached Bank of America early Wednesday about a potential deal.

The investment by Berkshire should help allay market concerns about Bank of America. Shares of the financial firm have been battered of late over fears the company lacks sufficient capital. The stock has fallen by nearly 30 percent since the beginning of August.

Bank of America CEO Brian Moynihan swore that he didn’t need a capital infusion, at a time when he was negotiating with Buffett. BofA jumped 22% on the news. Other bank stocks were up as well.

Maybe this is the future of bailouts, although in a way it’s also part of the past. Remember that Buffett sunk a bunch of money into Goldman Sachs in the middle of the financial crisis. That sweetheart deal eventually worked out for him, and I’m sure this will as well.

This looks like the future of bailouts, finding an angel investor to stand in for the government and put up some needed cash. But I’m not sure how this deals with their longer-term issues. BofA still has liabilities that are far bigger than its market capitalization, even with that $5 billion from Buffett. And in fact, none of these cheap loans and ready cash for the banks has done anything to boost the economy, which is rebounding back on the banks’ earnings.

Two U.S. Treasury secretaries and Federal Reserve Chairman Ben S. Bernanke provided capital and cheap loans to banks during the last three years to help fuel an economic revival. It hasn’t worked out.

While those policies benefited Wall Street, they failed to produce a sustained recovery on Main Street, where unemployment remains more than 9 percent. Now the sputtering U.S. economy may sap bank earnings and Wall Street bonuses.

Profit estimates for companies including Bank of America Corp. (BAC) have been slashed as much as 30 percent following a report showing weaker-than-expected growth in first-half gross domestic product and after the Federal Reserve said it plans to leave benchmark borrowing costs at historic lows for two years. The 24-member KBW Bank Index (BKX) has dropped 21 percent since July 28, the day before the latest GDP figures were reported, compared with an 11 percent decline in the Standard & Poor’s 500 Index.

“The political class is fixated on how the banking system caused the problem in the first place and therefore how it will have to cure it in the future — that if you get the banks working again the economy works,” said Robert B. Albertson, chief strategist at Sandler O’Neill & Partners LP in New York. “It drives me into silly laughter. It’s the other way around.”

The way it’s been described to me is that some liberals wake up in the middle of the night worrying about how there can be an America without a middle class. People like Tim Geithner wake up worrying how there can be an America without a Goldman Sachs. And that worldview has dictated all future events. They have propped up zombie banks in the hopes that the economy would follow. It hasn’t worked at all.

And then of course you have the possibility of a real meltdown among European banks, a market crash that would ripple sharply on bank stocks here. CDS spreads are higher than at any point since the financial crisis, a big warning sign.

I hope the market enjoys Warren Buffett’s little investment.

UPDATE: Bank of America explicitly stated that they “intend to meet this standards without having to issue additional common stock.” But the deal gives Buffett warrants to purchase 700,000,000 shares of common stock at $7.142857 per share. This is pretty much lying to investors.