The plan being unfolded by the Bush administration for restoring confidence and stability to the financial markets is staggering in the risk it demands of taxpayers. Congress should resist pressure from the Bush administration for an instant rubber stamp.

Transferring $700 billion in bad debt from Wall Street to Main Street should be done only after careful consideration of the consequences. Nor should the government plunge into the markets without a clear exit strategy.

The Bush administration, led by Treasury Secretary Henry Paulson, should calm its rhetoric. The economy will not collapse because policymakers proceed at a more deliberate pace to make sure they get this right. Paulson is a Wall Street veteran who lacks the standing and independence to demand a take-it-or-leave it bill from Congress.

The first thing that must be determined is if such a large-scale, unprecedented intervention into the free market is necessary. After a weekend of frantic administration lobbying, the answer may be a self-fulfilling yes. But Congress ought to at least examine whether confidence can be restored by methods less burdensome to taxpayers.

If Congress does proceed with the bailout, it ought to be guided by a set of principles.

First is that shareholders in the firms that sparked the crisis by wildly chasing the profits of increasingly exotic investment vehicles should not be forgiven their losses. They enjoyed the rewards when the firms were flying high, and now they must understand the consequences of risk.

Also, there needs to be a timetable for getting the government out of the markets once it gets in. The goal should be the sooner the better. The assets being taken over by the government should be sorted out and resold as quickly as possible. The net value of those assets should be maximized, which will require disposing of them in open, free-market transactions, including public auctions.

Tight parameters should be established for the bailout. It should not be extended to credit card debt or other areas of the economy. The notion that the United States is collectivizing investment risk must be firmly dispelled.

Before it comes up with a final plan, Congress should also examine the government's role in the crisis, such as how changes in accounting rules contributed to the liquidity squeeze in the credit markets. In addition, federal laws aimed at encouraging home ownership have led banks to approve riskier mortgages. Part of the discussion should be not just which additional regulations are needed to avoid a repeat of this crisis, but which old laws need to be rewritten.

Considering such a monumental proposal in advance of a national election complicates the process. Keeping election-year politics out of the decision-making will be virtually impossible.

But there are some things Congress can and should do for consumers, including lowering the transaction costs of renegotiating a foreclosed mortgage. Make it easier for troubled borrowers to restructure the terms of a distressed loan and the payoff may be far fewer foreclosures dragging down balance sheets.

There is much for policymakers to consider. Despite the overheated worries of an imminent business collapse, there is time to negotiate a bipartisan solution that calms the markets while protecting the interests of homeowners and taxpayers.

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