One point I haven't seen made is that the structure of the bailout deal, at least as currently proposed, makes action to help struggling homeowners much, much more logical. As things stand, the Treasury Department is planning to buy troubled assets with taxpayer money. Those assets, broadly speaking, are mortgages. Those mortgages are becoming worthless because homeowners are unable to pay them. Those taxpayers will only recoup their investment if the assets turn out not to be worthless. That means helping homeowners. What the deal does is connect the the governments balance sheet directly to the fortunes of many homeowners. As Rob Shapiro says, "The Treasury and the Fed now are using nearly $1 trillion of Americans' money to bail out financial institutions...Congress must put at least as much effort into containing the crisis at one of its critical origins, by helping people keep their homes so the housing market and the derivative instruments based on it can stabilize." If the underlying markets don't stabilize, then the assets based on them don't stabilize, and the taxpayers lose their shirts. Also, Paul Krugman has been great through this battle, and you should be reading him thrice-daily.
