bill clinton (who i'm not a big fan off) had a really good idea of what's going on from what i saw on the daily show... about reviewing the loans to see if a lower payment could save the loan from failing outright, about loaning with interest or taking part of the upside, instead of just handing them free money for screwing up royally.
interview starts at the 9:30ish mark if you want to skip straight to it, 11:00 for actual bailout bit:
The Daily Show Full Episode | Tuesday Sep 23 2008 | Comedy Central