EDITORIAL: Finally, financial reform hits the floor

After three days of filibuster and political posturing, financial reform has finally made it to the Senate floor. It's about time. Two years after costly bank bailouts, taxpayers passionately want Congress to improve the odds against a repeat.

The debate will be acrimonious. But there is general agreement on the critical broad strokes: A financial services oversight council to monitor systemic risk and a consumer protection bureau. A transparent system for trading derivatives and a requirement that banks hold more cash to cover their bets on those exotic securities. And authority for Washington to dissolve failed financial services companies.

Unfortunately a $50-billion, industry-financed fund to help pay for dissolution has been stripped from the bill. But with the debate in the red zone, there are other missteps to avoid.

Financial firms shouldn't be forced to spin off their investment operations, or discouraged from trading with their own money. That would hurt the competitiveness of U.S. banks and cost New York, where many are located. The Senate should also avoid side deals of the sort that offended the public when slipped into health care reform. That means no exemptions from consumer protection regulation for sectors like payday lenders. And special dispensation for owners of existing derivatives contracts, like Warren Buffett, shouldn't be slipped into the bill.

If ever there was a time for tough, pragmatic regulation, this is it. hN