Our financial system will get through the present crisis, although there will be some further bumps ahead and Bear Stearns may not be the only company to go under or find a merger partner. But it is not too early to ask: what went wrong and how can we avoid such crises in the future?

Attention now focuses on changes in the legal and regulatory structure. We can no longer afford fragmented oversight. The Federal Reserve and the Securities and Exchange Commission must work together more closely. If investment banks are to have access to the discount window, the Fed should be able to dictate more stringent capital requirements and monitor risk management.