Last week, President Barack Obama asked Congress to move swiftly to create a new financial regulatory system for the US. The system is clearly broken, and fixing it should be a high priority. However, moving swiftly to put in place a new regulatory system now would be a serious mistake.

There are several reasons not to rush regulatory reform. We are in the midst of a financial crisis that is crushing the economy. Recovery of the financial system has to be the first priority and is a complex task. Without the ability to allocate capital to productive uses, so that businesses and households start spending, the economy will continue to contract.