Give the bailout time

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Congress missed a chance to provide a quick boost to the economy when it failed to extend unemployment benefits before adjourning to hit the campaign trail. An extension should be at the top of the agenda for the lame-duck session next month. In the meantime, the federal government can help California and other states that are struggling to borrow funds even for short-term needs. With Treasury bills surging in popularity, the government can raise money for the states far more cheaply than they can do so for themselves.

In return, Sacramento can try to slow the foreclosures that are at the heart of the global financial crisis. Despite having more troubled borrowers than any other state, California has done little to limit the damage caused by foreclosures or guard against another subprime mortgage meltdown. Lawmakers blocked most of the major proposals, and Gov. Arnold Schwarzenegger vetoed all but one of those that made it through. Now, as they grapple with the budget, state leaders also should find a way to extend to all troubled borrowers with subprime or exotic loans the relief that state attorneys general announced Monday for Countrywide Financial borrowers. That includes delaying foreclosures and modifying loans in ways that do not reward the most egregious risk-takers. The goal is to buy time -- not just for lenders to avert needless foreclosures, but for the Treasury Department to loosen the credit crunch that's exacerbating the problem.