The extensive financial, or housing and mortgage, rescue program in its present form is clearly designed to first lift Wall Street off the mat. Details are still being worked out in Washington on it but that's where its main focus is. Some say that this direction is ill-advised, though. Among the heavy hitters supporting that is the Chairman of FDIC, or Federal Deposit Insurance Corp., Sheila Bair who just voiced her displeasure the other day.
In the center of the dispute is the belief that the key problem now is the number of foreclosures that still keep on rising in many states. If homeowners were able to make their mortgage payments the banks wouldn't be in such a mess and therefore more should be done to help borrowers out. The cycle of defaults begins on the street level and spreads from there up to the lenders and institutional investors. So, pouring billions into wobbly financial institutions is largely missing the point.
There is another point to be made here. Real estate values continue to deteriorate in multiple areas, including in Las Vegas, and is mainly the result of all these foreclosures flooding the marketplace. As values drop, people are more likely to walk away from their homes and the underlying mortgages become less and less valuable and that will hurt banks and mortgage lenders even more.
The argument as a whole does have some merit and ought to be considered as the bailout plan is being implemented. This is no longer only a subprime issue either. An alarming portion of better quality mortgages is now going bad, too.