Upon taking office, President Obama promised not just to avert financial collapse but to reform the financial system so that such a catastrophe would not be repeated. But as recently as Thanksgiving, Obama made it clear that his work in this regard was far from complete. "We cannot rest," he said, "until we have moved beyond the cycles of boom and bust of reckless risk and speculation that led us to so much crisis and pain these past few years."
His solution is a large financial regulatory reform effort, which advisers expect to pass Congress this year. The question is whether the reforms, once they have been chewed and spit out by Congress and the banking lobby, will be enough. One point of contention is the proposed Consumer Financial Protection Agency (CFPA), which would provide a new layer of independent regulation on financial institutions. The Chamber of Commerce is dead-set against the plan, which was already weakened substantially in the House. As Elizabeth Warren, who runs the congressional oversight panel for TARP and might be appointed to the agency if it is created, wrote to supporters this week, "The fate of the Consumer Financial Protection Agency will be the best way to follow the story moving forward because consumer products were the most abusive and because the CFPA has real muscle to stop those abuses." But at this point, the fate of the CFPA, and the larger financial reform effort, remains unclear.