Please: I have a question about Economics/Housing Market bailout [View All]

This is going to be a dumb, naive question but I have been wondering about this. Could someone explain why this wouldn't be a good idea?

Since banks/creditors are in trouble because all these ill-advised loans are being defaulted on, and since so many people are losing their homes because they cannot pay their mortgages, why doesn't the govt. bail out the homeowners by giving them money that MUST be earmarked for paying back loans/home loans only? It seems to me if they did that, then the money would "flow" up to the banking institutions anyway AND people could not become homeless thus becoming a further drain on our country's infrastructure. Think of it as a reverse trickle down theory.

Is there some fatal flaw in this?

Thanks for the explanation. This is one of the things I love about DU. We are a vast pool of people with expertise, educating each other.