It appears that federally-backed mortgage lenders Fannie Mae and Freddie Mac may be in their own business too deep, and their plight sheds a sobering light on how taxpayers somehow end up being the fall guys for businesses that should know better.

The two institutions back half of the mortgages in the country and are expected to show losses of $100 billion. It’s a high price to pay for a business that was backed by the government to ensure there would be enough money available for mortgages. Unfortunately, the institutions took that government backing and gave loans not necessarily to those who could afford them but to those who wanted them at any price.

Now taxpayers may be on the line for another $25 billion to help bail out the troubled lenders, according to the Congressional Budget Office. That money would be used to buy their stock or lend them more money.

If you asked the average person on the street if they would invest in a company that just lost $100 billion, or lend this company money, the answer would be a resounding ‘no.’

Still, Treasury Secretary Henry Paulson met with Senate Republicans Tuesday to suggest just that action on the part of Congress. While CBO Director Peter Orszag told Congress there was a better than even chance Congress would not have to bail out the lenders, Paulson suggested Congress signal it is willing to do so to calm financial markets.

In essence, Paulson is asking Congress to intervene in market signals, and to do it while putting taxpayer money at risk. But worse than that, Orszag suggested these “jittery” financial markets have already assumed Congress would bail out the lenders if necessary. Not doing so could create more turmoil.

Unfortunately, Paulson and Orszag are probably depressingly correct. The financial markets are now set up to create a damned if you do, damned if you don’t scenario. And while many taxpayers would like to tell Fannie and Freddie to find their $25 billion elsewhere, taxpayers would likely see the balance in their 401Ks go down even further.

A bailout now may indeed be the only solution to stemming losses already occurring from declining home prices and rising energy and food prices.

What’s needed is a retooling of financial responsibility. We need to set up a system where organizations like Freddie Mac and Fannie Mae know from the get-go they will live by their own business decisions. In the future, we need to set up a system that cannot consider a taxpayer bailout.

Then maybe the market will get the right signal not to invest in these risky and complex mortgages from the start.