EDITORIAL: Worthy financial reform for the banks

The financial reform bill now in the homestretch in Congress is a good bid to prevent a repeat of the meltdown that plunged the nation into economic chaos.

No regulation can ensure there will never be another financial crisis. Each fiasco is different, and there's no way to prevent what you can't foresee. But the legislation would plug key regulatory holes. And it would give officials additional tools that should help mitigate the damage the next time things go awry. That's no small thing.

Congress should pass the bill. And on the contentious question of how to cover the $20-billion tab, it should be guided by one premise: Banks should pay; taxpayers shouldn't.

Under the bill, almost all derivatives would be regulated and traded transparently on exchanges. Banks would have to hold more capital to cover their investment bets. And a new council of experts would monitor risks to the system. Washington would be able to liquidate troubled companies whose collapse would cause widespread damage. And consumers would be protected by a bureau empowered to enforce clear rules on mortgages and other financial products.

That's all good, but there's more to be done. As regulators write rules to implement the new requirements, Congress must make sure the process isn't hijacked by bank lobbyists. And wounded mortgage giants Fannie Mae and Freddie Mac should be next up for retooling. But first Congress should lock down this necessary reform. hN