Treasury Secretary Paulson made the right decision in not using taxpayer funds to bail out Lehman Brothers. While some have opined that it didn't seem fair that the government got involved in the Bear Sterns debacle and won't lift a finger to help Lehman, the circumstances between the two were quite different.
Bear Sterns' failure was something that occurred suddenly and with little warning. Lehman Brothers, on the other hand, had half a year to put things right, but failed to do so. Merrill Lynch was in the same boat as Lehman Brothers six months ago, but managed to off-load, write off, or restructure their bad debt, leaving them in a better position than Lehman, making them ripe for acquisition by Bank of America.
It isn't up to the taxpayers to make good on someone else's bad decisions. It sets a bad precedent, making it more likely other banks or investment houses will look to government for bailouts when they gamble with other people's money and lose.
The same is true of US automakers, whose poor planning, bad decisions, and mounting entitlement load should not garner them taxpayer funded bailouts to the tune of hundreds of billions of dollars.