There is much to applaud in the financial regulatory reform bill announced last Friday by House and Senate negotiators. It would limit some of the riskiest activities of banks and regulate the multitrillion-dollar market in over-the-counter derivatives. It would give federal regulators the tools, if they need them, to shut failing large banks and financial firms instead of bailing them out.
In significant ways, the bill would also protect Americans directly. Consumers would be shielded from many forms of abusive and predatory lending, and investors could be empowered to influence corporate boards that have long been impervious to shareholder concerns.
The bill is a considerable accomplishment. It is the final version. Congress should pass it quickly.
At the same time — and in the months and years ahead — lawmakers must acknowledge the bill’s shortcomings and be prepared to take corrective action. Many of the bill’s provisions come with exceptions or exemptions that could, in practice, swallow the new rules.
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