Good bailout or bad bailout?

LET'S STIPULATE that Citigroup is in deep trouble. Less than two months ago, the Wall Street giant looked healthy enough to bid for control of Wachovia Corp. when that Charlotte-based banking company began taking on water. The deal fell apart, and since then, Citigroup has taken $25 billion in federal bailout funds, its share price has plunged, and it is now seeking a new round of government help. Under a rescue agreement announced late Sunday, the Treasury will inject another $20 billion into the company and guarantee $306 billion in loans and securities.

The deal seemed to reassure investors yesterday. Yet it also raised a new round of questions about how the Treasury and the Federal Reserve are handling the nation's financial crisis. Is the government applying any consistent principles or measures in determining which troubled firms deserve to be bailed out, and to what degree? Or are the Treasury and the Fed just eyeballing it?

And if they are, what are they seeing? Does the government have any handle on what Citigroup's potential liabilities are? The Wall Street Journal reported that Citigroup has $2 trillion in assets on its balance sheet - and another $1.2 trillion stowed in "hidden" entities off its balance sheet.

Critics have accused Citigroup of taking too many risks. At this point, is there any amount of mismanagement that would disqualify Citigroup or any other financial firms from receiving taxpayer money, or does any large firm qualify for any amount of assistance that it might need? The bailout has other strings attached; the firm agreed to cut dividends and limit executive compensation. But at some point, should the firm's managers, directors, and shareholders be sent packing altogether?

And should only financial institutions be eligible for the federal government's help? So far, Treasury Secretary Henry Paulson has shown little inclination to use bailout money directly on measures to slow the foreclosure crisis by helping homeowners. The new Citigroup bailout does require the firm to follow a wise plan by the Federal Deposit Insurance Corp. to modify the terms of certain mortgages. If that's a reasonable demand to make of Citigroup, why not implement the plan more broadly?

Financial firms aren't the only ones that are seeking help; homebuilders as well as the nation's automakers want Congress to protect them. How does the argument for propping up Citigroup differ from the one for propping up General Motors? Without criteria for whom to bail out when, answers seem less economic than political.