Perspectives: With Congress' Focus on Health Reform, Overhauling Regulation May Be a Tall Order

Congress wasn't designed for efficiency. It's supposed to be hard to make laws. Add to that Congress' tendency toward a one-track mind, and it becomes easy to be skeptical that this will be the year for major financial-system reform.

The lawmakers have a big project on their hands with health reform. Maybe as big as the legislative branch has undertaken in recent generations. Each day, the slightest movement in the health debate draws nationwide attention. And attention is the fuel of congressional action.

Though financial reform is among the central priorities of this legislative session, it would be a near-miraculous performance to see Congress complete all the items on its grand to-do list: health legislation, economic reform, climate legislation, and also finish its required work on the federal budget. Congressional sessions typically run into December. That gives the lawmakers just a few months to race through the agenda of the Democratic leadership.

Congress has received the complex and sometimes far-reaching financial reform proposals from the Obama administration. A few of the proposals have been translated into bills and have seen a little legislative action. But the bulk of the reforms -- including those being greeted with the most trepidation by the affected industries, such as insurance -- still await their first steps.

The passage of the one-year anniversary of the U.S. economy's flirtation with the brink managed to drag the issue into some focus again. President Barack Obama took advantage of that calendar-driven spotlight to send a message to the financial community: "The reforms I've laid out will pass." He delivered a speech in the heart of Manhattan's Financial District, asking Wall Street to help jump-start the reforms that it clearly distrusts or outright opposes.

"There will be those who defend the status quo. There always are," he said. "There will be those who engage in revisionist histories or have selective memories." But he said, "We will not go back to the days of reckless behavior."

He wants a Consumer Financial Protection Agency. He wants regulation of the largest companies -- those that threaten the rest of the financial system.

"We've got to close the loopholes that were at the heart of the crisis," Obama said. "Common-sense rules of the road don't hinder the market. They make the market grow stronger."

The insurance industry's chief entanglement in the drama of the economic crisis was American International Group Inc. -- which has become the recent star of anniversary retrospectives. Obama did invoke its name in his speech, but the insurance industry has otherwise occupied a generally tangential role in the debate over reform. The consumer agency could end up regulating mortgage and title insurance. The systemic-risk regulator could potentially oversee some of the largest insurance companies. And while the proposed Office of National Insurance would focus entirely on the industry, it would be more informational than regulatory.

With a few months left before adjournment, can Obama split his time between getting health care reform done and pushing financial legislation through?

One of Obama's chief allies in this effort -- Sen. Chris Dodd, D-Conn., chairman of the Banking, Housing and Urban Affairs Committee -- promised action. "The President got it right. We need 'change and change now,'" Dodd said after Obama spoke on Wall Street. "I am working with my Senate colleagues to prepare a comprehensive bill to reform the financial system and protect consumers and investors to ensure that a crisis like this never happens again."

With powerful groups like the U.S. Chamber of Commerce devoting massive, expensive campaigns to derail these reform ideas -- and with Republicans putting up an aggressive opposition to just about everything that comes out of a Democrat's mouth -- introducing a bill would only be the first shot in what promises to be a heated battle.