Is It Fair? No.

Congress and the White House moved with surprising speed (measured by Washington legislative time, of course) last month to pass a bill aimed at bailing out the U.S. housing and mortgage markets. Like all legislation these days, the 694-page bill contains a grab-bag of initiatives, but the most important elements put the full faith and credit of the federal government behind mortgage giants Fannie Mae and Freddie Mac while creating a program designed to help hundreds of thousands of troubled borrowers avoid foreclosure on their homes.

The legislation signed by President Bush on July 31 is but the latest in a series of initiatives by the Federal Reserve, Treasury, and Congress to stem the rising tide of foreclosures and shore up the beleaguered banking industry. No one really knows what all this effort will cost taxpayers. But there's no doubt taxpayers are on the hook if the housing market continues to deteriorate.

Is that fair? Why should folks who didn't get caught up in the real estate frenzy of the 2000s pay for the financial mistakes of those that did? Many people didn't stretch their finances to buy as big a house as possible or invest in several "sure-fire" properties. They didn't take out interest-only mortgages, option ARMs, or apply for so-called liar loans. They were prudent with their money, perhaps continuing to rent while their friends bought homes or maybe staying in their smallish abode because the mortgage payments were affordable. Now they're on the hook for bailing out Wall Street, bankers, and irresponsible borrowers. That's not fair, is it?

No, it isn't.

It isn't fair that the taxpayer is on the hook to rescue Fannie and Freddie while top management of the mortgage giants keeps their multi-million dollar a year jobs. There's something wrong in a world where former chief executives like Stanley O'Neal of Merrill Lynch and Charles Prince of Citigroup lose billions of dollars of shareholder money and helped create the credit crunch, yet they reaped so much money on the way out that they'll never have to worry about paying a health care bill or stay up late at night worrying about finding work.

That said, none of this means the bailout is a mistake. "My own view is that the world isn't fair," says Zvi Bodie, finance professor at Boston University. "But would it be fair to put the economy into a deep recession or depression? I don't think so."

There's the rub. If the monetary and fiscal authorities are right in their judgment that the risk of an economic plunge of frightening proportions is real then the Herculean actions they're taking are fair to all of us. What's more, if innovation is the core dynamic in a capitalist economy, the engine of growth and higher living standards, then there will be booms and busts, especially during periods of rapid technological change. It's in the nature of the beast. Like it or not, limiting the downside damage when the boom goes bust is a critical part of the monetary authorities job.

History rewards the bold -- not the timid -- when the financial system is threatened with collapse. And that may not be fair, but it's necessary.

Oh, as for those that were prudent with their money? There will be plenty of opportunity to buy a home at a discount. That's fair play, no?