Former Fed Chair Paul Volcker says the problem is ‘moral hazard’ – policies leading investors and bankers to believe they can take future risks without bearing the full cost.
Withdrawing federal insurance is part of a broader exit strategy from the government's emergency supports for the economy, expected to gather steam this year.
The momentum for reform tends to fade when the economy shows signs of returning to normal after a crisis.
But the Federal Reserve head, Ben Bernanke, also warns that the economy will still feel weak, in terms of jobs and wages, for some time.
He called on the financial industry to join in an effort to update regulations for the 21st century.
Yes, regulatory reform needs to pass, but the president also points toward ethical reform.