Outside Editorial: No soft landings

Posted: Thursday, September 25, 2008

It's bad enough that taxpayers are being asked to bail out Wall Street firms and banks to the tune of $700 billion for their greed and recklessness.

But lawmakers should draw the line at asking the public to pay for golden parachutes for the CEOs who helped to bring the financial system to the brink of collapse.

Treasury Secretary Henry Paulson presented Congress over the weekend with a two-year bailout plan. The document was only three pages long, a brevity belying the enormous consequences for the U.S. economy and world markets.

Congressional Democrats are trying to inject a bit of accountability into this deal. They want Treasury to force firms that are selling their troubled assets to the government to limit executive compensation, including the ability to rescind bonuses and curtail severance packages.

Paulson has balked at that idea, saying banks won't participate in the rescue plan if the bailout package is "punitive."

Most taxpayers don't support the rescue plan, even if they understand that some government action is needed to prevent a wider economic crisis. It makes it even more unpalatable to them to think they would be paying for some CEO's soft landing.

A better proposal would include in the bailout a program to help homeowners at risk of default by allowing judges to rewrite mortgages to lower their monthly payments. That could help stabilize falling home prices, which are at the core of the problems.

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