Using language that has got others into trouble before him, Timothy Geithner, US Treasury secretary, on Tuesday called financial regulatory reform “a just war” – words given substance by a legislative proposal unveiled the same day by Mr Geithner and Barney Frank, chairman of the House Financial Services Committee. The sweeping powers it grants the government – presumably those Mr Geithner wishes it had had during the financial paralysis last year – are what give the bill both its strengths and its weaknesses.

Under the law, no company engaged in financial activities would be able to hide from a new Financial Services Oversight Council. It would be empowered to seek all information it needs to determine whether an entity or an activity has systemic significance for overall financial stability. It would subject systemically important institutions – banks or non-banks – to potentially draconian requirements to mitigate risk to the financial system. And it would establish authority for the Federal Deposit Insurance Corporation to take control of such entities if they fail.