Another bailout

Thursday, Sept. 18, 2008 | 2:07 a.m.

The Federal Reserve continued its unprecedented actions to stave off an economic collapse this week with an $85 billion loan to ailing insurance giant AIG. The central bank also pumped $70 billion into the faltering economy to try to ease the credit crisis.

Government officials said AIG is so intertwined in the economy that its collapse would have pulled down thousands of other businesses. That is becoming a common refrain.

The federal government this month took over mortgage giants Fannie Mae and Freddie Mac, and the Federal Reserve Bank of New York this year had to prop up failing investment bank Bear Stearns to prevent an economic meltdown.

For the average American, this is frustrating, if not infuriating. For years executives at Wall Street investment banks took hundreds of millions of dollars in annual salaries and bonuses as their companies feasted on the bull market. Now, the federal government is bailing them out.

We certainly understand why the federal government has stepped in to salvage the mess Wall Street made. Allowing corporate behemoths to collapse could devastate the economy and further hurt working Americans.

Unfortunately, the bailouts further the perception on Wall Street and in corporate boardrooms that they are too important to the country to fail. That thinking leads only to more of the same arrogance that landed the economy in the current situation.

A number of complex and interlaced issues have helped drag the economy down, including the irresponsible lending practices in the mortgage industry, banking deregulation and the government’s failure to regulate business properly.

To solve these problems, it will take more than populist rhetoric, such as Sen. John McCain’s call to “clean up Wall Street.”

While trying to find short-term relief efforts, Congress should unravel the causes of this crisis and find real solutions so taxpayers won’t again be on the hook for corporate America’s failures.