Login System

[Carbonix]

Hello,
I have made myself a little log in code but i have an issue,
When the account exists i get the error that the username or password is incorrect, i have looked through my code and just can not understand what i have done.
Here is the code:

def loginReg():
    welcome = input("Do you have an acount? y/n:\n>> ")
    if welcome == "n":
        while True:
            username  = input("Enter a username:\n>> ")
            password  = input("Enter a password:\n>> ")
            password1 = input("Confirm password:\n>> ")
            try:
                if username in open(username+".txt").read():
                    print ("Error: Username already exists")
                    loginReg()
            except OSError as e:
                if password == password1:
                    file = open(username+".txt", "w")
                    file.write(username+":"+password)
                    file.close()
                    welcome = "y"
                    break
                print("Passwords do NOT match!")
                loginReg()