Let Me Ask Again

Why is it better to bail out the big banks than it is to help the individual home owners that are too far in debt? I asked this when the gov't secured $30B in loans for JPMorgan in March. Bearing in mind that my economics training amounted to Econ 101 and 102 in college, this was my haphazardly thrown together idea.

I don't know what the exact rules would be but off the top of my head lets say that if an individual or family is about to file bankruptcy or go into foreclosure they could get help. The government could give them money to refinance their loan. A formula for the amount could be the lesser of 1) $100,000, 2) 1/3 the amount of the outstanding loan, or 3) 1/3 the value of the house. Furthermore the assistance would only be for primary residences not for peoples vacation homes or speculators.
...
Take a family with $150,000 outstanding loan on $200,000 home. ...The family will get a $50,000 grant from the government - it won't be a check, it will be paid directly to the mortgage holder. The existing loan will be paid off using the grant and by refinancing the home.

Who wins? The mortgage holder and investment banks that hold the loan. The bank / mortgage broker that gets the commission on the refinancing of the loan. The family that gets a $50K bump in the equity of their home and a lower mortgage payment. The economy since the loan officer and the home assessor that have more work and money, the investment bank that gets paid on a risky investment has more money to pump into the economy, the family has more disposable cash.

I still don't know why this isn't a better idea.