@those that think this bailout money is actually going to do something useful
Do not be fooled. The $700 billion (ultimately $1 trillion or more) bailout is not predominantly for mortgages and homeowners. Instead, the bailout is for mortgage-backed securities. In fact, some versions of these instruments are imaginary derivatives. These claims overlap on the same types of mortgages. Many financial institutions wrote claims over the same mortgages, and these are the majority of claims that have "gone bad."
At this point, such claims have no bearing on the mortgage or housing crisis; they have bearing only on the holders of these securities themselves. These are ridiculously risky claims with little value for society. It is as if many financial institutions sold "earthquake insurance" on the same house: when the quake hits, all these claims become close to worthless — but the claims are simply bets disconnected from reality.
Follow the money. Average Joes and Janes are not the holders of the other side of complicated, over-the-counter derivatives contracts. Rather, hedge funds are the main holders. The bailout will involve a transfer of wealth — from the American people to financial institutions engaging in reckless speculation — that will be the greatest in history.
Rescuing financial institutions is not the best solution. Yes, banks are needed to provide capital to businesses. But it is not necessary to spend $1 trillion to maintain liquidity. If the government is to intervene, it should pick and choose which claims to purchase; claims that are directly tied to mortgages would be a good start.
So I stick to the point I made in the first post. Wasting what little money we have available on the national credit card by giving it to the incompetent fools who blew the money of investment banks is not the way to fix this crisis.
Maybe you don't like the idea of building infrastructure, but in today's world infrastructure does not necessarily mean roads and bridges. It could be used to give $15 billion to every State to overhaul it's communications. Ripping out the copper and replacing it with fiber. Besides the re-employment of tens of thousands of engineers, the industries that support this kind of thing would boom as well.
The jobs created in manufacturing and construction that would be required to support building such a network would also be high paying jobs. It would put the US back on the technology map, because the upgrade to the internet alone would be something innovative technology companies could make good use of.
I still hold that this is a somewhat more viable plan to pull the US out of recession, rather than giving $700 billion to a few useless idiots that put all their banks' money in hedge funds and other high-risk investments - like mortgages for the homeless.
As for credit, well it's up to these banks really, but if their business is to make money from lending, not doing so will mean what? They no longer are in business? I'm sure other lenders will be more than happy to buy them out and take over their market. In fact I think you'll find that's exactly what's going on right now.