Not Bailing Out Mortage Lenders

I hope this is factual, and not a GD. We shall see.

OK, so if society bails out lenders who made bad loans, this creates a “moral hazard.” That is to say it rewards people who did dumb things.

Now, the government wants to help people who took these loans. (Now, arguably of course they did something dumb and ought not to be protected. Let’s set that aside for a moment.)

How the heck, even in theory, can society help the borrowers keep their houses without helping the lenders? If we help some poor smuck pay for his house, the money has got to go to the lender, yes?

Unless I am missing something basic.

Already started in GD. Someone please report this thread. Moderators, please close, delete, shred whatever.