The Bearded One Has A Bad Idea

Having already made the poor decision to bail out securities firms that have suffered losses from the mortgage-backed securities, Federal Reserve Board Chairman plans to extend the bailouts:

In an extraordinary action, the Fed in March agreed to let investment houses go to the Fed -- on a temporary basis -- for a quick, overnight source of cash. Those loan privileges, which are supposed to last through mid-September, are similar to those permanently afforded to commercial banks for years.
"We are currently monitoring developments in financial markets closely and considering several options, including extending the duration of our facilities for primary dealers beyond year-end should the current unusual and exigent circumstances continue to prevail in dealer funding markets," Bernanke said in prepared remarks to a mortgage-lending forum in Arlington, Va.
The Fed's decision to act -- temporarily at least -- as a lender of last resort for Wall Street firms was made after a run on Bear Stearns pushed the investment bank to the brink of bankruptcy and raised fears that others might be in jeopardy. It was the broadest use of the Fed's lending powers since the 1930s.
Bear Stearns was eventually taken over by JPMorgan Chase & Co., with the Fed providing $28.82 billion in financial backing.

Underwriting securities is a risky business. The owners and employees of these firms are handsomely compensated for bearing the risk. Many of them earn more in one day than most of us earn in one year. If they make bad decisions, they should eat their losses. The government has no need to bail them out. For every person working in securities, there are at least 1,000 more who would like to. The firms and the individuals who fail can be easily replaced.