Dean Baker of the Center for Economic and Policy Research, a DC think tank associated with liberal economist and Nobel Laureate Joseph Stiglitz, among others, writes that Obama's plan improves financial regulation but doesn't go far enough. Excerpts:

"The plan to establish an agency to ensure that financial products are fair and transparent to consumers is a big step forward. Such an agency might have prevented many of the worst abuses in the subprime market.

"The proposal to provide regulatory authorities with resolution powers for non-bank financial institutions is also a useful reform. Such powers would have greatly facilitated regulators' efforts to deal with the collapse of Bear Stearns, Lehman Brothers, and AIG.

"This plan should also go far toward eliminating the sort of regulatory arbitrage that allowed firms to seek out the weakest regulators. It would have been desirable to have also included some sort of national consolidation of regulation of insurers, but that would have faced enormous political opposition.

"The requirement that hedge funds and private equity funds register with the SEC is also a step forward in transparency, although it is not clear how much, if any, of this information will be made available to the public.

"Requiring that derivatives be traded through clearing houses will also prevent some of the worst abuses in this area. However, it would have been preferable to require that they be exchange-traded...

"The principles for altering executive compensation are also useful, but it remains to be seen how effectively these can be enforced to change entrenched practices.

"There are some areas in which the proposal does not take some obvious steps, perhaps most notably by not directly addressing the conflict of interest that exists when a company hires and pays a rating agency to rate its issues...

"The biggest problem with the Obama administration's regulatory proposals is that they support the view that we had an economic meltdown primarily because we had an inadequate regulatory structure rather than failed regulators.

"The basic story of this crisis was not that the regulatory authorities lacked the ability to rein in this disaster before it was too late. Rather, the regulators – most importantly the Fed – opted not to use their power to rein in the housing bubble...

"Politicians and regulators have a direct interest in portraying the crisis as being the result of an inadequate regulatory apparatus rather than failed regulators, because failed regulators should get fired. However, by not holding failed regulators accountable, this reform proposal is setting the grounds for the next crisis."