Now that the Dodd-Frank financial regulatory overhaul has been signed into law, the Financial Crisis Inquiry Commission should be given a new assignment.
The commission, set up last year to investigate the causes of the financial market meltdown, ideally should have diagnosed the causes of the crisis before Congress prescribed a treatment.
Congress, with the politics of a midterm election in mind, wouldn't wait for the commission's report, due Dec. 15, before passing the overhaul legislation.
But now the task of the commission should be extended to evaluate how the regulatory overhaul is working.
It should conduct periodic hearings on how well the capital markets are functioning, including how successfully the Financial Stability Oversight Council created in the new law is monitoring and addressing systemic risk.
Because of the need for the SEC and other regulators to go through the process of adopting rules to put the legislation into effect, it could be years before the implications of the overhaul become fully known.
But a reinvigorated commission should start its evaluation now to give investors, corporations and financial institutions — as well as the Obama administration and Congress — an ongoing report of the changes in the market climate that result from the new law.
Congress and other policymakers could then react more quickly to change any parts of the law, or any regulations, that appear to be harming the economy, rather than wait for another crisis.
In addition, the administration and congressional leaders should declare their commitment to move swiftly to revise any provisions in the law having adverse impacts.