The bailout, comrades, welcome the bailout

Here's the way I see this bailout mess.
Years ago, the government passed legislation encouraging the banks to lend to the poor (rather than "discriminate" against them). The message was that just because somebody is a poor credit risk is no reason to deny them a loan. The lenders jumped right on that, because there is huge money to be made, provided that the government is willing to cover your losses. So they whipped out these balloon mortgages, knowing full well that these buyers were never going to be able to pay those higher payments when the balloon arrives. (A balloon mortgage offers lower interest rates now, but higher ones later on in the payback). The bankers told the buyers that the value of their property would increase by the time the balloon arrives, and so they could easily refinance with a better interest rate. Only that didn't happen, which means that the default rate went through the roof, and the bankers started losing big time. Now remember, they were making it big time before the balloons landed.
It's as if you or I went to Las Vegas to gamble, and if we win, we keep the money, but when we lose, the government covers our losses.
In fact, this has been referred to many times as "privatizing the profit while socializing the debt." This is about as succinct and accurate as you can get.
Those fat bankers are keeping the profits they made when they loaned all that money for balloon mortgages, and making us cover their 'losses' now that the tide has turned. In a free economy, they would be allowed to fail, and more capable, responsible lenders would arise to take their place. There is nothing "free market" about this deal at all. Yet, economics professors are now announcing that this proves that the free market won't work, that the economy must be controlled. What a fraud. An honest analysis would show that government intervention has failed.