The federal government has bailed out the banks, the Detroit Three and now, perhaps, will bail out some homeowners who are in over their heads. None of these moves are savory, but all are understandable given the breadth of the credit crisis and its impact on the U.S. economy. The government now should do whatever it can to help struggling homeowners.

Under a program being negotiated by officials from the Federal Deposit Insurance Corp. and the Treasury Department, banks or other lenders would reduce monthly payments to affordable levels by lowering the interest rate, cutting the amount owed or extending the payback period. Lenders would get a federal guarantee that they would get a portion of their money back if borrowers default on the new loans.

The problem with any mortgage bailout plan is separating the truly deserving from the speculators. No doubt some who made poor decisions based more on greed than common sense will be helped. But that's a price we must pay for years of indulgence and neglect.

A couple of safeguards would help: Only loans on owner-occupied homes should qualify. And there should be other means testing. Those who bought a second home in Key West — or the North Woods — shouldn't be eligible.

The government acted swiftly and appropriately to thaw the credit system. The $700 billion bailout, the backstopping of commercial paper and increased insurance for deposits and money market funds were all moves aimed at stimulating credit flows. News this week that Marshall & Ilsley Corp. will sell $1.7 billion in preferred stock to the Treasury is a sign of how aggressively the government has moved.

But we're concerned that the Treasury has allowed banks too free a hand. Using the federal cash to buy up weaker competitors is an appropriate use of the money because it beats allowing banks to go belly up. But banks should be lending a big portion of the federal infusions to deserving borrowers; there is plenty of evidence they are hoarding it instead. The Treasury may need stricter standards to spur lending if its current program of gentle persuasion doesn't work.

And for certain, it's time to turn the government's attention to ensuring that deserving homeowners don't sink and take their neighborhoods with them.

REPRINTED FROM THE MILWAUKEE JOURNAL SENTINEL.