How the bank bail-out could have worked

We are now well over a year into the bank/financial institution bail-out. Trillions of dollars of taxpayer money have gone to huge companies that knowingly took very foolish risks with other people's money in order to enrich themselves. The people whose money was lost have gotten nothing and by government decree have been forced to give even more. Meanwhile the foreclosures roll on and more and more lives are ruined.

The entire mess started with home owners unable to afford the increased monthly payments on the adjustable rate mortgages(ARM's) their broker or bank talked them into(probably many could barely afford the low introductory payments). Facing the possibility of that many mortgage defaults the banks got nervous. Then the mortgage insurers(AIG, etc...) got nervous. Then the companies backing and depending on the insurers(Lehman, Goldman Sachs, etc...) got nervous and the whole house of cards started to come down.

Since the problem started with individual home owner's inability to meet an increased monthly mortgage payment, shouldn't the solution start there also? How many people would have remained in their homes and current on their mortgages if the government had offered them a few hundred dollars per month until a refinance solution could be worked out by congress and the banks? Would everyone have been so panicked if all those mortgages were getting paid by the government? Would simply keeping peoples' mortgages current have been any more expensive than the actual bail-out? How differently would our government be seen if all those trillions of dollars had been used to keep people in their homes instead of keeping huge, greedy companies afloat?

It is too late this time but this or a similar problem will happen again in the future. Next time I hope our government has the backbone and the common sense to look for solutions that address the real cause of the problem. The current financial crisis was not caused by huge banking and investment companies facing bankruptcy. The current crisis was caused by home owner’s inability to pay escalating monthly mortgage payments and this cause was never adequately addressed by any part of the bail-out.