Moral Hazard. It sounds like the name of a failed town in a Clint Eastwood western. We all live there now.

Until recently, "moral hazard" was heard only on the lips of insurance agents and over lunch in conservative think tanks. Both Fed Chairmen Alan Greenspan and Ben Bernanke have uttered the phrase "moral hazard" in front of congressional committees to warn against excessive financial risk. Senators and members nod, look down at their cheat sheets and think, "Mmm, right, moral hazard."

Now,...