Acutally Useful Mortgage Bailout Idea

Art De Vany has a blog primarily focused on eating and exercising in a way compatible with the human metabolic system.  But his day job used to be an economist.  He proposes a bail out plan–the government buying options on excess housing inventory–that makes a lot of sense to me:

"So, who should be helped to clear out the over priced homes and underperforming mortgages? Leamer suggests the government might purchase the homes available for sale right now. It would take a purchase of half a million homes to solve problem. That would cost about $150 billion and would help homeowners directly, not Hank’s pals on Wall Street or those sketchy guys at Fannie and Freddie and Country Wide. My option approach would cost a lot less and put cash in the hands of homeowners and the banks right away. Follow the government buy out of overpriced homes with mortgages that are under water with tax credits for first-time homebuyers and a tax rebate for buyers of existing homes. This would clear out the stock of homes for sale quickly."

This plan clearly cuts out the greedy crew who invented timeless financial classics like the no-income-no-asset home loan (that they promptly sold the same day because of the out-sized risks).  Why are we considering enriching Wall Street companies with a no-oversight $700B bail out? Are our leaders asking the wrong questions? Are they asking the wrong people?