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Instead of protecting borrowers, lenders, and investors from their own folly such proposals would make us all worse off. Most obviously, taxpayers would find themselves working longer for government -- well beyond July 11.

More responsible homeowners also would suffer. Only one-in-20 homeowners has a subprime loan; the tail should not wag the dog in the mortgage market.

Unfortunately, credit is not infinitely expandable. Diverting good money to bad borrowers means fewer loans would be available for those who did not buy a bigger home than they could afford. Mortgages will be less available and more costly.

Equally important, a bailout would set an a dangerous precedent. Instead of holding borrowers, lenders, and investors responsible for their actions, the government would be sending the bill for their mistakes to others. Personal accountability is fair and just. It also sends a powerful message: watch what you are doing.

Every time politicians bail out an industry, they encourage more irresponsibility in the future. In this case, everyone in the process -- homeowners, lending institutions, brokerage houses -- would learn that profits are theirs to keep but losses can be palmed off on taxpayers.

Nor would future problems be confined to the homeowners' mortgage market. The federal government has previously bailed out automakers, steel companies, savings and loans, and hedge funds, among many others. We must break this cycle of irresponsibility.

The breakdown of the subprime lending market is going to generate many losers. That's unfortunate. But we should not exacerbate this problem by making it another crisis for taxpayers.

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Ben Bernanke