trying to understand the mess we are in part two

in my on going research into this country's financial mess, i am discovering some alternatives to the bail out. i am not yet sure if these are viable but i like alternatives especially when it could potentially save me a whole lot of money. one proposal is the government act as lender. instead of taking on the bad debt, the government loans money to banks in trouble. the banks put up their mortgage backed portfolios as collateral. this gives the banks an infusion of cash at a set interest rate but affords more protection to the tax payer, since these would be loans that the banks eventually must pay back. the loan could come due when the markets have regulated themselves and the over all economy takes a turn for the better. there is the possibility that the banks could default and fail but the safe guard would be more government over sight into the banks, should they need to be saved. now, i am not sure what would happen if multiple banks began to fail and needed shoring up by the government in order to avert disaster. who then eats that costs? what would that costs be? i am leaning towards this plan, simply because it does not out right rescue anyone from their own damn greed. the other plan would have the government acting as a hedge fund. this would prevent the government from being stuck with the worst mortgage securities. it is still an investment, giving the anemic economy a much needed shot of iron. another proposal is a more grass roots approach and i tend to like the sound of it because the average joe gets help. this involves mortgage breaks to help ailing homeowners. the government takes over some mortgage backed securities and then restructures the loans, making them more affordable to the home owner, thus preventing mass foreclosures. this, in turn, would increase the value of those securities, so that the government is not left holding a bag of something worthless. again, i am no economist but i tend to like the sound of the last proposal. it makes sense to me that you would go straight to the source of the problem by aiding the struggling home owner. yes, they got in over their heads but this mass defaulting on loans and consequent foreclosures is continuing to drive the cost of housing down and muddy up the markets even more. however, i must say that this might correct itself if prospective sellers lowered their financial expectations to meet the more practical ramifications of prospective buyers and there are buyers to be had, just not at some of these prices. i am hoping that the powers that be will come up with an alternative to the buy out as i have my doubts. should we go through with the buy out and the money is mismanaged or it fails, then our next option would almost have to be to federalize the whole damn thing and that is one scary option. i believe in free enterprise with over sight and implemented regulations but i do not want to see the government socialize the entirety of the system. wow, this stuff gives me a head ache.