This is not to say that I think people should get rewarded for buying a house they couldn't afford, but if you're trying to prop up the economy by dumping government money into it, I'd much rather it went to people whose worst mistake is not being able to do math than people who intentionally engaged in high-risk investment and then covered it up with an impenetrable paper trail.
But what do I know -- my expertise is in getting chips to work, not finance. A lot of commentators are blasting congress for not immediately giving Paulson the $700 billion blank check he was looking for, but recently economists are singing a different tune.
Politico summarizes the reaction of a number of economists, and a wide spread of economists signed this letter.
Luigi Zingales summarizes how I feel (with better credentials):
For somebody like me who believes strongly in the free market system, the most serious risk of the current situation is that the interest of few financiers will undermine the fundamental workings of the capitalist system. The time has come to save capitalism from the capitalists.
His full paper is here.