I know I'm terribly naive and this would never happen in today's fucked up system, but --

1. The problem is that all these banks invested in securities backed by home mortgages that the homeowners can't pay off, rendering the investments worthless.

2. If somebody -- say, the federal gov't -- just went ahead and PAID OFF all the delinquent mortgages ... or paid off enough of them, or a sufficient portion of each mortgage, so that the homeowners could make their payments, wouldn't that restore the value to those investments?

3. Couldn't $700 billion go a really long way toward achieving point (2)?

According to Wikipedia (I know, Wikipedia, but anyway), "the U.S. mortgage market is estimated at $12 trillion with approximately 9.2% of loans either delinquent or in foreclosure."

So, just doing a back of the envelope calculation, let's say there's $1 trillion in bad mortgage debt out there (about 9.2% of $12 trillion). That is a shitload of money, but if you just went to the delinquent homeowners and, like, JUST GAVE THEM $700 billion -- the same way they want us to JUST GIVE Wall St. $700 billion -- wouldn't that solve a lot of issues?

Imagine you were struggling to make your monthly payment and then someone came along and gave you 70% of the principal balance, in cash, all at once. Would that not greatly increase the chances that you could pay off the remaining 30% on your own?

And would that not in turn make any bonds, credit swaps, etc. derived from your mortgage a valuable asset once more?

I'm just saying. If we're going to throw away this money on the mortgage crisis, let's do it from the bottom up.