Then take the 700 billion and use it to create a new, FOR PROFIT, lending agency that is privately run and government sponsored.

You’re kidding, rigth? You just described how Fannie and Freddie were created. That’s precisely how we got in this mess!! The gov’t should be out of the mortgage business (and most other businesses for that matter). And that includes ‘sponsoring’ monsters that buy mortgages for political reasons.

Socialism has been utter failure in the USSR, Cuba, etc. Even the Chinese and Vietnamese realize that and now promote free markets. What makes you think that socialism would work here? The mess we’re in today is further proof that we need free markets, regulated yes, but with only private (non gov’t) entities taking risks and enjoying the benefits (or bearing the losses) of their enterprises.