Simply this bailout fails to put the risk of these loans onto the investors as required for a free market to work. This money will be borrowed and will put further inflationary pressure on our economy.
Yes, there would be pain, if we let them fold. We will have pain by bailing them out, too. In fact, the chance of future bailouts in other industries will increase and that just makes the average American the chump who gets stuck with the bill while others play.
We need to return to a free market and government intervention must be eliminated.