The homeowners get foreclosed on, but the banks get bailed out.
Think about it this way. The fed loaned 16 Trillion to banks at nearly zero interest and we still have the same problems and a slow economy. They expected that the banks would lend, people would spend, economy would grow. The second part of that is the issue. With a huge debt load, people can't borrow or spend.
Had we taken a fraction of that 16 Trillion, we could have paid off every mortgage, student loan and credit card in the U.S.
Credit Default Swaps would expire worthless, banks would receive full payment, Americans would have nearly zero debt. People would spend, economy would improve.
I'm not supporting bailouts, but we spent the money anyway, we could have at least solved the problem.
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