New York Times

New York Times

The interagency statement that lent more force to Mr. Paulson’s remarks was issued by the board of the Federal Reserve System; the Federal Deposit Insurance Corporation, which protects the deposits of individual bank customers; the Office of the Comptroller of the Currency; and the Office of Thrift Supervision.

Both Mr. Paulson and the agencies emphasized that their message to banks was not meant only for those that have benefited directly from infusions of money from the government. “Lending to creditworthy borrowers provides sustainable returns for the lending organization and is constructive for the economy as a whole,” the agencies said.

Moreover, the agencies said, they “expect banking organizations to work with existing borrowers to avoid preventable foreclosures.”

The agencies also addressed an issue that has angered the American public: the enormous salaries paid to many high-ranking executives of the financial world and the “golden parachutes” bestowed upon some of them as farewell gifts even as they are ousted for failing at their jobs.

“Poorly designed management compensation policies can create perverse incentives that can ultimately jeopardize the health of the banking organization,” the agencies said, adding that they expect banking institutions “to regularly review their management compensation policies.”

The regulators’ statement called on lending institutions to be aggressive in aiding struggling homeowners — that is, “to adopt systematic, proactive and streamlined mortgage-loan modification protocols.”

Asked whether he envisioned adding more billions to the rescue plan, Mr. Paulson said he was “still comfortable” with the $700 billion figure.

Although the secretary said the steps taken since the onset of the crisis had brought “signs of improvement,” he added, “Our financial system remains fragile in the face of an economic downturn here and abroad.”

President Bush will be host at an economic summit meeting this weekend...

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