There's no shortage of backseat driving as the government tries mightily to grope its way—blindly, some might say— out of the financial crisis. The main critique, as we've all heard ad nauseum by now: Main Street eats it as Wall Street gets bailed out. Either we do it this way and save evil but ailing banks, or we bail out defaulting homeowners, thereby showing non-defaulters that fiscal responsibility is a concept for sissies and losers. But there is, perhaps, a third way: Have homeowners whose homes are stuck in the quicksand give up their homes to their lenders. Then make those lenders rent the homes to former homeowners for five years, at market rate. A little pain all around, but nothing quite like "the massive disruption ... and social dislocation" that would occur if our house of cards falls. For more fun, see "Morning Mortgage Meltdown."
· Shouldn’t We Rescue Housing? [NYT]
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