Bailing them out

"Fannie Mae and Freddie Mac are so large and so interwoven in our financial system that a failure of either of them would cause great turmoil in our financial markets here at home and around the globe."

-- Treasury Secretary Henry Paulson, justifying the federal bailout of the mortgage firms

I am not an economist, so I will not comment on the necessity of the mortgage bailout. But, is anyone really surprised that this was going to be a problem?

Did no-one else think it was not really a good idea to offer easy interest only loans with a balloon payment only a few years out to people who would never be able to afford that payment?

Didn't anyone else think that driving housing prices higher so quickly with easy to borrow money might cause trouble down the line?