Anti-Capitalist Running The Federal Reserve?

In case you missed it, Ben Bernanke, current Chairman of the United Socialist Soviet Republic Federal Reserve, has recommended that "government and private entities cooperate" in reducing some of the stresses on homeowners whose home equity may have dropped in the mortgage meltdown.

http://www.bloomberg.com/apps/news?pid=20601103&sid=aLPiHQ.ASN48&refer=us

Specifically, Bernanke is asking banks to "forgive" some portion of the mortgages held by the banks so that consumers might have some home equity left, presumably to prevent their walking away from their homes (which would prevent even more foreclosures). However, the most likely effect would be (presuming that these same homeowners arent' great at math) that they would simply tap their remaining lines of credit and buy more TV's, home appliances, and pay off credit card debt.

Let's play the logic game. Who is "government"? Eventually that will end up being you and me, and we will pay to subsidize other people's foolishness. Who are "private entities"? These are the banks who participated in creating mortgage contracts with people to purchase their homes. If the banks were to take Bernanke's idea to heart, credit will freeze up even further, which further exacerbates the crisis! So let's get this straight: consumers who financed high priced homes with adjustable rate mortgages, or negative amortization mortgages, and fudged their documentation using "no doc" loan papers (where they pay a higher rate without income verification, but then take the teaser ARM or Negative Amortization rates), need to be bailed out collectively by those "mean sinister banks" and by those "kind generous smart U.S. citizens" who try to spend less than they earn? No. Way. The quickest and most efficient way out of this mess is to let the market actually "work", which means prices need to fall enough for buyers to buy homes again (note to Bernanke: in economics this is called pricing equilibrium).

As far as I'm concerned, Bernanke is a collectivist anti-capitalist. This idea reeks of desperation, of Fed muddling, of having no policy flexibility, and attacks the banking system even further. This is anti-capitalist, and applies Socialist/collectivist solution sets to problems. These solution sets only give more incentive for consumers in the future to make bad choices, and should be avoided at all costs. But instead of just ripping the band-aid off the wound, Bernanke likes to slowly pull it off, taking off one hair and one skin cell at a time.