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What a difference a year makes.
Last June, President Obama unveiled a comprehensive proposal for financial reform, saying:
Millions of Americans who've worked hard and behaved responsibly have seen their life dreams eroded by the irresponsibility of others and by the failure of their government to provide adequate oversight. Our entire economy has been undermined by that failure.
So the question is, what do we do now? We did not choose how this crisis began, but we do have a choice in the legacy this crisis leaves behind. So today, my administration is proposing a sweeping overhaul of the financial regulatory system.
On that same day, President Obama ticked off his priorities for financial reform:
First, we're proposing a set of reforms to require regulators to look not only at the safety and soundness of individual institutions, but also -- for the first time -- at the stability of the financial system as a whole…
Second, we're proposing a new and powerful agency charged with just one job: looking out for ordinary consumers….
Third, we're proposing a series of changes designed to promote free and fair markets by closing gaps and overlaps in our regulatory system -- including gaps that exist not just within but between nations.
A lot of people wondered whether such an overhaul could actually be achieved. Even with our financial system undeniably broken, even with trillions in lost savings and millions of lost jobs, they wondered whether Washington could actually come together and get the job done.
Secretary Geithner warned against inaction:
Every financial crisis of the last generation has sparked some effort at reform. But past efforts have begun too late, after the will to act has subsided.
We cannot let that happen this time. We may disagree about the details, and we will have to work through those issues. But ordinary Americans have suffered too much; trust in our financial system has been too shaken; our economy has been brought too close to the brink for us to let this moment pass.
That’s why we have never let up in the fight for financial reform.
Look at where we are now, a year later, the finish line is in sight.
Right now a Congressional Conference Committee is in its second week of meetings. Thanks to the strong leadership of Chairman Dodd and Chairman Frank, as well as Chairwoman Lincoln and Chairman Peterson, the House and the Senate are tirelessly working through the last few remaining differences that exist between their bills.
In the coming days, they will reach agreement. And once that happens, the President will be able to sign into law the strongest set of financial reforms since those that followed the Great Depression.
We don’t have to wait until that day to know what reform will look like.
While some work remains to be done in Conference, the parameters of any final bill are largely set. And they largely follow the principles outlined by the President over a year ago.
For example, we already know that whatever bill comes to the President’s desk will end the problem of “too big to fail.” It will end taxpayer-funded bailouts. And it will make sure that American families and businesses never have to foot the bill for the irresponsibility of Wall Street.
We already know that the bill will give regulators the tools they need to curb risk-taking by financial institutions so that we can help prevent future crises.
We already know that the bill will put in place the strongest consumer financial protections in American history. It will make sure that consumers have the information they need to make informed decisions. And it will crack down on companies that take advantage of their customers
And we already know that the bill will create a safer, more transparent derivatives market, so that all of those transactions are brought out of the shadows and placed under strong supervision. It will also force derivatives dealers to hold capital against their risks so that financial firms will be accountable for the risks they take.
We know all this because all of it is already in the bills passed by the House and the Senate.
Everyone has a stake in financial reform. If you’re a family trying to buy your first house, a parent trying to fund your child’s education, an employee trying to save for retirement, or an entrepreneur trying to expand your business, you have a stake in financial reform.
Over the past two years, we have all lived through a devastating economic crisis. We have all learned important lessons. And when the President signs the final financial reform bill into law, he will have delivered on his commitment last year: to lay a new foundation for a stronger, safer financial system.
Neal Wolin is Deputy Secretary of the U.S. Department of the Treasury