NY Fed Gives $10 billion to JPMorgan

In order to avoid the moral hazard problem of bailing out Bear Stearns's shareholders, the Fed has given the value of the bailout to JPMorgan's shareholders.

Had the Fed broadly offered the early discount window access plus the $30 billion of NONRECOURSE funding on less liquid assets (otherwise known as a free option), there would have been many takers and JPMorgan, which provides approximately nothing in exchange for this gift, wouldn't have received the benefit. The Fed, having maximised the sale price, could have charge for this benefit by taking a note from Bear Stearns for a few billion dollars.

Put another way,
in order to avoid a payment to Bear Stearns which would create moral hazard in the future, the Fed gave that payment to their friends.

The Fed and Treasury have tremendously smart, civic minded leadership. Why is it that their decisions are repeatedly either lacking in judgment or creativity or even basic good sense?