The US subprime loan crisis has turned into a morality play. Subprime borrowers – people with bad credit who took out high-priced mortgages to buy homes beyond their means – are cast as hapless victims. Subprime lenders (and the investors who bought their securitised loans on Wall Street) are portrayed as Shylocks preying on the American poor. Now the whole crew is looking to the government to step in, and spare them the consequences of their financial alchemy. Washington should resist.

President George W. Bush on Friday announced some modest measures to help truly needy borrowers, but he ruled out a bailout for the merely greedy (whether borrowers or investors). Unfortunately, Congress will probably not stop there. Millions of Americans could still be about to lose their homes, and millions more will lose money in the markets. That is the kind of crisis politicians cannot resist meddling with.