About that $700 Billion Bail-out

Now, it could be that I'm completely wrong about this for reason having to do with the technicalities of how financial things work, but hasn't anyone thought about how this proposed bail-out/buy-out could be turned into an incredible opportunity to not just save from disaster, but actually improve the lives of people living in the hardest hit American neighbourhoods?

My reasoning goes like this:

The government buys up all those "worthless" financial instruments containing defaulted mortgages, and this pours money into failing banks, keeping them alive and somehow maintaining "confidence" in the market - which is of course one side of the equation, whether you think it's a good thing in the long run or not.

But the other side is that those mortgages that the government now owns are attached, somewhere down the line, to actual developed real estate that is currently "worthless" because the owners can't pay the mortgages and the bottom has fallen out of the housing industry so no one else will buy the properties.

So - isn't this an amazing advantage for the government of the U.S. to provide vast amounts of low-income housing and provide space for crucial community services all across the country?

I mean, if the government buys the mortgages, it controls the real estate that was mortgaged, doesn't it? I know that if I default on my mortgage, the bank gets to take my house and sell it to recoupe their loan to me. And until that house is sold - which banks in the U.S. are having trouble doing right now which is why those mortgages are worthless - the bank, which owned the mortgage, controls what used to be my house.

So if you do the big bail-out, you've got Goddess knows how many homes across the country that the government now controls that can be placed under the administration of a low-income properties commission, which rents them out to the working poor whose lives have been destroyed by trying to pay off those sub-prime mortgages. Hell, create lease-to-own programs so that over time, people really can own their own homes.

And at the same time, rent some of those properties to community organisations that want to provide shelters for the homeless, shelters for battered women, free medical and legal clinics, after-school programs, agencies that help prepare upgrade employment skills, all sorts of community services that neighbourhoods in distress desperately need in order to get back on their feet in a time of reecession and massive job loss.

Isn't this one way to bail out Main street and Wall Street, as some people are demanding?