One ongoing critique of the Obama regulatory reform plan is that it would enshrine "too big to fail" banks, making them not only invulnerable to regulators, but also invincible against competitors. It's certainly true that the proposal doesn't push to resurrect barriers between commercial and investment banking. Nor does it set an arbitrary size threshold over which banks would be banned. But, what's not in the plan on systemic risk is dwarfed by what's in it. By imposing an awesome array of tough regulatory and capital standards, the Obama administration would create sharp downdrafts that force even the current colossi of Wall Street to reconsider their combined charters.

Even if the plan is whittled down on the Hill, it's a formidable challenge to any firm under the aegis of the Federal Reserve Board, the Securities and Exchange Commission or the Commodity Futures Trading Commission. Proposals are in the works to implement as much of the Obama plan as possible under current law. First up, the Federal Deposit Insurance Corp.'s restrictions on private-equity firms, derived in large part from the administration's tough approach to mixing banking and commerce.

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