Congress will soon begin hearings and debate on whether to create a new systemic risk regulator (SRR) to monitor financial institutions, funds and markets, with the twin goals of discovering contagion and preventing its spread.

The stakes in this debate are enormous. Decisions about the role and structure of the SRR will affect the competitiveness of the US financial system for decades. There is much political pressure for a quick solution, but the complexity and gravity of the subject matter suggest Congress should be particularly careful in its review of regulatory options.

In 2006, well before the crisis, a small group of us at the Treasury, with the encouragement of John Snow, the secretary, and the blessing of the White House, began formulating and writing a proposal for broad financial regulatory reform. Our thinking did not include a new SRR.