As the financial and housing markets continue to make news, the word "bailout" has been heard repeatedly.

In the case of the Bear Stearns collapse and sale, bailout is an inaccurate description of what happened.

In the case of the housing crisis, a bailout is precisely what most taxpayers do not want to see, even if some homeowners are given flexibility to make their mortgages more affordable.

The arranged sale of Bear Stearns to J.P. Morgan Chase with the support of the Federal Reserve has been called a bailout by many. But most knowledgeable observers see it as something else — a highly unusual, but necessary, move to prevent widespread financial panic and possibly a global economic crisis.

Former Treasury Secretary Paul O'Neill, quoted last weekend in the New York Times, debunked the bailout idea when he said, "I would say they (the Fed) didn't save Bear Stearns. They saved the financial system from collapse. ... Bear Stearns was destroyed."

Now that the specter of a financial meltdown has eased, there is a sense that the problem, while severe, will be worked out over time.

There also is a growing sentiment that reforms on Wall Street and in Washington, D.C., are necessary to help prevent a similar crisis from occurring in the future. Even if economic cycles and so-called bubbles of speculation, such as in housing or with dot.com and tech stocks in the late 1990s, are inevitable, some expanded regulation in the financial markets is overdue.

The current financial turmoil has its roots in the historic escalation in housing prices seen in recent years.It also was fueled by greed and excessive risk-taking at several levels, from mortgage brokers, bankers and investment companies selling packages of mortgages.

While financial uncertainty remains, the sense of panic of a few weeks ago has eased.

Left to its own, the marketplace has powerful self-correcting powers, but in some cases those can come at a terrible cost.

In a perfect world, Bear Stearns would have been allowed to fail, and to file bankruptcy. But given the fragile psychology of the financial markets at that time, such a move could have triggered a domino-like run on other investment banks, which could have led to a global financial panic.

But when the Fed, acting as the lender of last resort, put taxpayer money at risk by guaranteeing some aspects of the Bear Stearns deal, it bolstered the argument that the federal government needs to have more oversight and tools to monitor risk in all financial markets, not just commercial banks.

If the Fed and, by extension, taxpayers, is expected to clean up major financial crises, there ought to be broader oversight and more regulation to help avoid those crises from arising in the first place.

The proposal announced this week by Treasury Secretary Henry Paulson is mostly an updating of the federal financial bureaucracies that oversee banking and investments. It is only one small step toward addressing the current financial troubles hanging over both Wall Street and Main Street.

Many Democrats in Congress want to see reforms go further, in terms of expanded regulation to cover investment banks, hedge funds and private equity investors. Some Republicans, despite their philosophical distaste for more regulation, also see the need for real reform.

Though there is a risk of going too far and stifling the financial markets, it's clear that Wall Street's latest period of greed and creative finance put the entire nation's economic health at risk.

And with the Federal Reserve giving investment banks access to emergency loans, which had previously been restricted to commercial banks, which are regulated, the investment banks should expect additional regulation to accompany their new access to the Fed's assistance.

Since this is an election year, many doubt that Congress will pass meaningful reforms in 2008. But the debate and crafting of new regulations and oversight must begin now.

On the housing and home mortgage fronts, election-year politics will see pressure mount for a bailout for distressed homeowners. But Congress should proceed carefully.

There is broad agreement that speculators, people looking for fast profits from flipping a house and those who entered into mortgage deals they couldn't afford because they expected housing prices to continue to rise forever, do not deserve a bailout.

Democrats, especially, will try to make political hay out of saving "victimized" homeowners stuck with mortgages they cannot afford. But most Americans expect targeted and prudent efforts that do not help people who knew the risks, but placed their bets anyway.

There can be an argument for easing terms of mortgages to allow more people to remain in their homes. But it must be remembered that many prudent people opted not to buy a new house in the housing bubble because they knew that the risks were great. These people do not want to see their tax dollars going to help others who gambled — and lost — in their real estate bets.

Some people deserve help, but many more do not.

Housing speculators, greed-driven mortgage lenders and investment houses that saw big profits in securitized mortgages all deserve to suffer the consequences of their actions.