Consumer advocates are quickly calling for the federal government to treat homeowners the way the Federal Reserve is treating Bear Stearns.  The Federal Reserve provided Bear Stearns with an indirect bailout over the weekend; providing JP Morgan Chase with access to $30 billion worth of liquidity needed for shoring up the once mighty investment banker.  At first glance, one might argue that if the feds can bail out a bunch of greedy Wall Street types, why not bail out the little guy who was screwed over by (guess who) the same greedy Wall Street types. 

I believe fair is fair.  If you are going to throw a lifeline at Bear Stearns, why not send one to Joe Blow consumer.  I tried my damndest to make an argument work for equity but I couldn't.  For example, I tried the equal protection argument.  If a homeowner is an investor and Bear Stearns is an investor, why not treat everyone as being in the same class and thus provide everyone with the same type of protection i.e. bailout.  It sounds good, until you start breaking down the similarities.  A home, for the most part, is not an investment. 

Yeah, homeowners, may think their houses are investments but what the consumer has done is purchased a final good.  Bear Stearns provides a service and plays a crucial role in the transfer of capital from idle hands to creative hands.  Bear Stearns is a part of the financial system, an intermediary if you will.  The homeowner does not play such a role.  The money simply stops at the homeowner.  

Yes, it appears unfair but remember, this is an election year.  The Bush administration does not want to add an eroded financial system to its legacy.  That would cost the Republican party in November.