After financial institutions lost almost $900 billion in the credit crisis, Congress and the Obama administration have proposed regulatory reform. Sensible proposals would begin with studies identifying the causes of the crisis.

The causes almost certainly include failures both within and between regulatory agencies. Rather than waiting for the report of the recently empaneled Financial Crisis Inquiry Commission, the Treasury Department has proposed an overhaul of U.S. financial regulation that would give key regulators additional powers. Included is a resolution procedure outside the Bankruptcy Code for bank holding companies and their nonbank subsidiaries, contained in the Resolution Authority for Large, Interconnected Financial Companies Act of 2009.

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