I don't know or understand all the nuts and bolts of the housing/financial crisis, but I understand enough of it to pose what I think is a good question.

Putting aside the issue of whether the gov't should be involved here at all (they shouldn't), look at where they've put the money. It is all in buying POS notes, injecting liquidity, and other esoterica.

What if they had used the money to buy the actual real estate? A property is in foreclosure? The gov't chartered corp would pay off the note to the bank, take title to the property, and throw the tenants out.

This would have let the air out of the financial balloon a lot slower, it would take properties off the market and preserve values for those that remain, and the taxpayers would have something to show for their investments.

If prospective buyers wanted the gov't properties they could buy them later for what ther gov't paid.

This is to simple not to have a major flaw. Tell me what the flaw is.

WW