Experts See a Need for Punitive Action in Bailout By PETER S. GOODMAN / NYTimes

[Demeter]

Experts See a Need for Punitive Action in Bailout By PETER S. GOODMAN / NYTimes

The Treasury’s proposal for a bailout, now being negotiated with Congress, is being challenged as fundamentally deficient... Many economists argue that taxpayers ought to get more than avoidance of the apocalypse for their dollars: they ought to get an ownership stake in the companies on the receiving end. But an underlying source of doubt about the bailout stems from who is asking for it. The rescue is being sold as a must-have emergency measure by an administration with a controversial record when it comes to asking Congress for special authority in time of duress...

Others argue that any bailout must pinch the people who have run the companies now needing rescue, along with their shareholders, addressing the unseemly reality that executives have amassed beach houses and fat bank accounts while taxpayers are now stuck with the bill for their reckless ways.

“It absolutely has to be punitive,” Mr. Baker said. “If they sell us the junk, then we own the company. This isn’t a way to make these companies and their executives rich. This should be about keeping them in business so the financial system doesn’t collapse.”...