Interest rate caps must be a price the banks pay for bailout

I have to admit that I am very impressed by Bush administration finally starting to come up with ideas on how to limit the damage from economic and financial "hurricane" created by housing collapse rather than just looking for someone to blame. Previously I have argued that I thought that to get things moving we need to cap the interest rates charged by mortgage companies. Of course, this would never happen voluntarily because the banks were defaulting even without interest rate caps.

However, now that government is buying "bad" mortgages, they can implement rate caps as condition of bailout. Once interest rates go down and through refinancing mortgages become more affordable it will benefit not just the troubled mortgage holders, it will benefit everyone. It will reduce cost of housing significantly for vast majority of people, making more money available to purchase other goods and services thus stimulating broader parts of the economy and promoting job growth. It will bring new buyers into the housing market increasing demand for homes and reversing price decline. Reduced mortgage payments, reversed housing price declines, and increased employment will finally bring the foreclosures rate down.

I think Paulson and Bernake think that bailout will cause banks to lower interest rates voluntarily. However, if I was putting up this much money, I think I would be entitled to a guaranty that it will actually happens immediately and not at some future point and at bank's discretion.