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When Bear Stearns collapsed, the share holders received $2 a share instead of the $30 a share it had traded at the day before. They were shocked and angered. Why?
Because the Fed did not want to reward bad management for bad management. At the same time they knew that allowing them to just fail would lead to world financial collapse. So they did what they though was best given two bad choices.
The same is true of later bailouts. Printing all this money is very bad but doing nothing in the opinion of the decision makers is worse. Two bad choices are all they had. The went with what they thought was the lesser evil.
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