In economic terms, "moral hazard" occurs when the beneficiaries of an action or investment are insulated from the risks of that action and are thus encouraged to make poor choices.

Froma Harrop in her July 16 op-ed column "Popping and paying" warned that if Bush administration officials "let market forces do their job" and allow Fannie Mae and Freddie Mac to fail, another Great Depression would be ushered in. Thus, a moral hazard is nurtured with scare tactics.

No company is "too big to fail." Allowing Fannie Mae and Freddie Mac to collapse would not trigger a national or global depression. What it would do is hurt a lot of people, but the right people: reckless borrowers and lenders who need to be taught a painful lesson. And the right people would be spared the costs of a bailout: people who bought homes they could afford, lenders who avoided making bad loans and future taxpayers who played no role in creating the mess.

Robbing the wise to pay the foolish is bad economic policy. The Bush administration should do the moral thing and end this moral hazard. Let Fannie Mae and Freddie Mac die.

David R. Snyder, Cary