"Sale" on, o ship of state...

I just read in the Business section of The Globe and Mail that, thanks to the bailouts and free money from the US Federal Reserve, the banks down there are making big profits again, but that defaults by homeowners (and unemployment) continue to plague the country. I had this vision of the Titanic suddenly being righted and merrily sailing off to New York while all its passengers flailed about in the freezing waters of its wake. What's wrong with this picture?

Why is this being allowed? I don't understand why the US Congress didn't make the bailout contingent on the banks getting their boots off the necks of homeowners. Why didn't they say something like "here's the money, but those loans now belong to us... go, sinner, and sin no more!"? Let the government deal with people in danger of losing their homes, while those same taxpayers foot the bill for the banks to throw off the crutches and run to bigger and better yachts for everyone?

But they didn't do that. They handed out the money, and the banks kept the loans... and, eventually, the homes.

I'm not saying this is particular to the United States. Capitalistic venality is capitalistic venality no matter where we walk the Earth. But it shouldn't have been done this way. After health, a home is the most fundamental thing. How do you get hired if you don't have an address? How do you register to vote and get action from a representative? I know people will get exorcised about the idea that some people would take advantage... but so what? So someone takes advantage and manages to keep a roof over his head. The banks aren't out anything; they just got paid off! They're happy, and millions of people don't wind up on the street, but have a warm, safe place to wait out the recovery of the economy. Neighbourhoods in Detroit and Cleveland and Los Angeles wouldn't look like war zones. The government would know who owes what; they could find a way to be paid back without disinheriting millions of men, women, and children, surely.

Why wasn't it done that way?