Riddle Me This

Why is it better for the government to secure $30,000,000,000 in loans to secure JPMorgan's buyout of BearSterns instead of securing the same amount of personal mortgages?

In either case as loans default tax payers are on the hook. If the personal mortgages were secured then the same amount of tax dollars are being pushed into the market but individuals are saved the personal loss and have a chance to continue to be consumers. They continue to pay sales and property taxes.

Sure, its easier to secure the loans at the investment banks because its in one place and determining which indiviudal borrower deserves a bailout and which doesn't isn't easy. But easier doesn't mean better.

And if we're going to bail out the mortgage banks why are we:
1. Imposing some regulations on these institutions to prevent this from happening again. Without the new regulations and the lesson that the gov't will come riding in on a white horse to save them the banks have no reason to reform.

2. More complicated, but if tax payer money has to be used to bail out these firms why shouldn't the tax payers, via the government, then own a portion of these banks? It SHOULD be non voting shares that the government can turn around and sell in the open market once it makes its money back.