No bailouts for fraud and its consequences.
It sounds to me as if the buyers of these collateralized debt obligations (mortgage bonds) may not have done their due diligence on a lot of these deals -- and this, coupled with the fact that these CDOs are such an open, unregulated field of investments, was what made it ripe for abuse that may not actually constitute fraud.
Something to keep in mind is that this isn't all that unusual in the modern financial services industry in the U.S. A lot of money has been made in the past simply because the people coming up with the great ideas and circumventing (legally) the regulatory bodies that oversee these things were always one step ahead of the regulators. I use Michael Milken and his entire junk bond industry of the 1980s as a perfect case in point. That guy was a financial genius who understood corporate finance better than anyone, and the vast majority of the "scandal" surrounding him (from a media perspective) involved no illegal activity whatsoever.