by Calculated Risk on 10/16/2009 12:10:00 PM

From MarketWatch: Summers: 'Time has come' for deep change for banks

White House senior economic adviser Lawrence Summers challenged U.S. financial institutions Friday to think about what they can do for their country by stepping up and accepting the regulations imposed upon them in the wake of the largest financial crisis since the Great Depression.

"Financial institutions that have benefited from government support can, should and must use this moment to think about what they can do for their country -- by accepting the necessary regulation to protect the American people," Summers said in remarks prepared for delivery at the Economist's Buttonwood Gathering in New York. "There is no financial institution that exists today that is not the direct or indirect beneficiary of trillions of dollars of taxpayer support for the financial system."
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"The time has come for fundamental change in the financial sector of our economy -- both in how financial institutions conduct their business and how they are regulated," Summers said.
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"[We have] one crisis every three years," Summers said. "Surely a system that produces this many accidents and accidents this severe is a system that is in very much need of reform."

Clearly this means much more than consumer protection and aligning compensation with the goals of the corporation (not on taking short term risks). Those are good first steps - as is regulating derivatives - but the key is that no bank should be “systemically important” or "too big to fail".