Treasury Secretary Henry Paulson has executed two fairly slick about-faces since Congress passed the $700 billion Wall Street bailout two weeks ago.

The first makes eminent sense. The second should outrage you.

Let’s start with Paulson’s positive turn. His original bailout plan would have had the Treasury rush to spend billions buying up toxic mortgage-backed securities. His new plan instead will spend the bailout’s first $250 billion buying up part-ownership in America’s biggest banks.

That’s an improvement. Taxpayers now will have something concrete to show for their money.

Here’s what’s still bad. Remember all that talk about the bailout legislation placing limits on excessive CEO compensation? That talk appears to have been a rather cynical smokescreen. Paulson and his top deputy, according to news reports, are assuring top Wall Street executives they have nothing to worry about on the paycheck front.

Those executives have plenty of reasons to trust the assurances. The bailout legislation that passed Congress does place some limits on excessive executive pay. But the limits come with a giant loophole. Paulson — alone — wields the ultimate power to define what counts as “excessive” and what doesn’t.

The American people have absolutely no reason to trust Paulson, a former high-finance CEO himself, on executive pay. In his bailout negotiations with Congress, Paulson fought restrictions on CEO compensation at every turn. He simply doesn’t see excessive executive pay as a problem that desperately needs fixing.

The Treasury secretary’s current course, unless Congress intervenes, will mean more business as usual on Wall Street. Last year, the CEOs of the nine major banks that we taxpayers now partially own took home, on average, $32.2 million each, nearly triple the average CEO pay at the 500 biggest U.S. companies. That’s more than $600,000 a week.

Nothing in the bailout regulations the Treasury Department has so far announced will prevent Goldman Sachs, the bank where Paulson accumulated a stock stash worth more than $750 million, or any of the other nine banks our tax dollars have just partially “nationalized” from offering similarly grand rewards next year. And that should worry us all deeply. The CEO chase after windfall earnings, after all, has played a major role in creating our current financial mess.

Outrageously huge rewards gave executives an incentive to behave outrageously. To hit the CEO pay jackpot, those executives took reckless risks that left our financial system in a shambles and shattered the retirement nest eggs of tens of millions of average Americans.

So what needs to be done? Congress must place real executive pay limits on all the financial institutions that get our taxpayer dollars.

The president of the United States currently makes $400,000 a year, about 25 times the pay of the lowest-paid federal employee. Why should the banking industry CEOs who benefit from taxpayer support make any more than 25 times their firms’ lowest-paid staff?

In the quarter-century after World War II, a time of unprecedented middle-class prosperity throughout our nation, precious few top executives made much more than 25 times their workers’ wages. Last year, America’s top executives made 344 times the pay of typical American workers. Big bank CEOs waltzed off with just over 1,000 times as much.

If we’re really serious about flushing reckless greed out of our financial system, that has to change. Congress — by rewriting the bailout rules on executive pay — can change it.

Sarah Anderson directs the Global Economy project of the Institute for Policy Studies and is a member of the New Economy Working Group. Sam Pizzigati is an associate fellow at the Institute for Policy Studies and editor of Too Much, an online newsletter on excess and inequality.

Get more news like this, directly in your inbox.

Subscribe to our newsletter.