While I respect and agree with much of your logic, let's not forget that it is the people who borrowed the money to pay for property they can no longer afford that are sticking it to the taxpayer by reneging on their promises.
My response is as follows and is relevant to the topic:
Your point is well taken. However, a financial institution should always be held to a higher standard. Therefore, while a consumer signed on the dotted line, the lender was willing to let the loan go through even though it was clear that the client couldn't survive financially in the short and long term.
All consumers, if given the opportunity, will borrow to the max. It is the responsibility of the lender to make the decision not to give the loan. While working for Fannie and Freddie from 2001 to 2006, I would contact the loss mitigation unit of the banks and the response was always the same from the loss mit team inside the bank, "why in the world did the bank give out the loan to this individual?"
The point being, it was abundantly clear from the initial loan docs that were approved, that the individual couldn't maintain the mortgage from the very beginning. You can't expect the public, who is more versed in the art of voting for American Idol contestants, to understand or care about the terms of a document. Most Americans routinely sign legal contracts without faking that they've read the terms beforehand. This puts the responsibility back on the banks.
By no means does my position support the belief that the consumer isn't to blame somehow. Instead, the banks should have been concerned about doing due diligence and determine the long term financial viability while remaining profitable. Such a stance may mean sacrificing short term competitiveness in order to avoid the pending train wreck. Or, you could at least sell out at the top like Golden West Financial did (my favorite financial institution, former Dividend Achiever and a real success story for a bank) when they got bought by Wachovia (WB).
Unfortunately, Fannie and Freddie fanned the flames which encouraged banks to take on more risk than was prudently acceptable. Touc.