I don't think the Gov't holding a porfolio of bad loans is considered an investment, so this is a bailout. Now, if the Gov't received an equity stake in the banks, like what Warren Buffet got with Goldman, then that would be a superior plan.

From American Banker, two days ago ---
Some facts instead of speculation on why some housing markets are strong.
Cheers,

Immigrants Seen Fueling Market for Homes (American Banker)

Demand for housing in the United States will accelerate in the next decade as immigrants, whose status has been hotly debated in presidential campaigns and in the U.S. Congress, look for homes, a Harvard University study said.

The number of new households, a key indicator of real estate demand, will rise to an average of 1.46 million a year for the next decade, up from 1.26 million a year from 1995 to 2005, according to a report issued Monday by Harvard's Joint Center for Housing Studies in Cambridge, Mass.

One-quarter of the growth will come from legal immigrants, the study said.

"Immigration has undergirded the housing market, and it's now reaching a size and scale where it's beginning to shape the market," Nicolas Retsinas, the director of the Harvard center, said in an interview.

Last year all of the top five surnames on California real estate deeds and four of the top 10 names nationally were Hispanic, said Mr. Retsinas, a former assistant secretary and federal housing commissioner at the Department of Housing and Urban Development and a former director of the Office of Thrift Supervision.

The Senate last week shelved a proposed rewriting of U.S. immigration policies, deadlocking over legislation to tighten border security, increase penalties for employers who hire undocumented workers, and give lawful status to illegal immigrants who pay fines and get "Z" visas.

One of every five U.S. residents 25 to 34 years old is foreign-born, according to the study. This age group is the primary source of household formation. Immigration, both legal and illegal, has added 1.2 million a year to the U.S. population since 2000, according to the report.

If illegal immigration fell to half its current level, the report said, U.S. household growth would be reduced by 5%, or 750,000 households during the next 10 years.

At least 20% of recent homebuyers in California, New York, New Jersey, and Florida have been foreign-born, and other states have seen immigrants account for as much as 14% of homebuyers, the report said. The biggest rise in the number of immigrant households has come in suburbs rather than the traditional urban sites.

The report, "The State of the Nation's Housing," also said that a drop in U.S. home building in the second half of 2006 shaved more than a percentage point off economic growth.

Builders cut production as the number of vacant new houses for sale rose by half a million by the end of 2006, the study said.

"Until some of the excess inventory is absorbed by the demand cycle and credit conditions stabilize, housing will continue to struggle and home prices will fall in more areas," it said.