Instead of giving the $700 bln to the assholes who mismanaged and gambled it away, how about paying off the bad mortgages for the folks who are being foreclosed or in danger of it?
Seems to me, it'll be the lesser of two evils and the little guys will finally benefit. Mind you, I'm not happy about giving that kind of money away, but I'd rather Joe Sixpack got a mortgage amnesty (here's your house, free and clear, just don't fuck up again) than some mortgage broker making a profit on it.
It'll also free up a lot of cash these people are currently forking over to these predatory scumbags. Also, it'll have the effect of shredding the worthless paper (I don't care what that nut Kramer says these packaged loans are worthless) instead of buying it from the sharks (probably at inflated prices).
With proper oversight of the industry once the deed is done (so this crap doesn't happen again), I have a good feeling it would work but what do I know, I'm just a mechanic?