Sub-Prime or Sub-Slime?

All this talk about a sub-prime bailout for the mortgage companies who engaged in a bonanza of hay-making over the last 5 years is nonsense. We now have politicians talking about how to "solve" this "problem" in the future by creating more rules and regulations. All of this talk about introducing more rules and regulations just adds another layer of credit-tightening at exactly the wrong time. For 2 years the media has been talking incessantly about a correction in real estate in general; now that it's here everyone seems surprised! I have an idea-- how about letting the market mechanism work?

Let's allow prices to fall enough to a point where buyers will supply liquidity. Let's allow mortgage companies to fail that did a preponderance of risky adjustable rate mortgage financing. Let's allow all of those people who financed their not-really-affordable homes to learn a lesson and negotiate with their financial institutions-- these institutions do not want to hold millions of trust deeds, and would rather offer some flexibility to the homeowner anyway. Let's allow the publicly traded mortgage companies to be punished by their stock price declines; again, at the right prices, buyers will supply liquidity for these stocks. This entire process of correction, if left to the financial markets, would unwind, correct, and stabilize in a matter of months.