What not to do about subprime failures.

• Position: Get Government to Back Off - Brief article

As high default rates on subprime loans continue, various state and Federal officials are eager to "do something" to counter the failures--especially to give aid to homeowners who bought mortgages they could not afford. "This is exactly the wrong approach," warns Alex Epstein, an analyst at the Ayn Rand Institute, Irvine, Calif.

"The current subprime problems are the result of borrower and lender irrationality, and of government intervention in the market to 'help homeowners.' Government housing assistance programs like Fannie Mae and Freddie Mac encourage people to buy homes even when they cannot truly afford them--and the government's longtime manipulation of interest rates to keep them artificially low led many to expect that their adjustable rate mortgages would stay low forever--only to see their fortunes at the mercy of government rate hikes or rate cuts.

"This does not absolve lenders or borrowers of responsibility for taking on risky loans, and it certainly does not...