Treasury Secretary Timothy Geithner testifies during a House Financial Services Committee hearing on Capitol Hill  in Washington, D.C. about financial regulatory reform.
Treasury Secretary Timothy Geithner testifies during a House Financial Services Committee hearing on Capitol Hill in Washington, D.C. about financial regulatory reform. - 
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Kai Ryssdal: The House Financial Services committee had a little get together today. Chairman Barney Frank hosted the first of a series of hearings into how to reform the regulations governing the financial industry. Today's topic was the Consumer Financial Protection Agency. And it seems that the CFPA, as it's known, is going to do somewhat less actual protecting of consumers than we'd been led to believe. Retailers will be exempt. Auto dealers and real-estate brokers exempt from its purview as well. No obligation to provide those plain vanilla investment devices.

Treasury Secretary Timothy Geithner said the proposal was useful but that the White House would like it to be a little bit tougher. So if things are moving in that direction, back-pedaling that is, we wondered what the White House might be able to get done on its own. And we put that question to our senior business correspondent Bob Moon.

BOB MOON: The short answer is "not much," according to leading financial reform advocates we spoke to today. The administration is already working around Congress: The Treasury Department and Securities and Exchange Commission have drafted a collection of their own tighter rules.

But Harvard University professor Hal Scott argues those are just strings in a tangled safety net. Scott is director of the independent Committee on Capital Markets Regulation. He says only Congress has the authority to redesign the entire regulatory structure.

HAL SCOTT: I believe that's absolutely essential to translate any of the substance into real, lasting, effective action.

Which is exactly what Treasury Secretary Geithner was pressing for today, to unravel the financial mess.

TIMOTHY GEITHNER: We believe we cannot achieve that within our current framework of diffused authority with responsibility divided among a complex mix of different supervisors and authorities who have different missions and many other priorities.

On some issues, the administration's hands are tied altogether. John Coffee heads Columbia University's Center for Corporate Governance. He says only Congress can crack down on the complicated "derivative" investments widely blamed for triggering the financial meltdown.

JOHN COFFEE: That's because Congress expressly deregulated over-the-counter derivatives, and only Congress can cancel that mistake made back in 2000.

The Treasury Secretary cautioned today the momentum for a financial fix could be lost "as the memory of the crisis recedes." But Harvard's Hal Scott warns that lawmakers had better not underestimate their constituents.

SCOTT: We still have unbelievable levels of unemployment, and we're going to have them for some time. People suffered great wealth losses, they're not going to forget about that. People whose homes were foreclosed are not going to forget about that. When we have the next elections, the American people are going to be rightly asking, 'What has the Congress and the administration done about this?'

In Los Angeles, I'm Bob Moon for Marketplace.