[IMGCAP(1)]Silver bells and major snow storms aside, I am struggling to get into the holiday spirit.

I am worried that we have now gone through two Christmas seasons with nary a single, meaningful reform to our regulatory architecture in this land. It is an architecture that in many respects facilitated the greatest financial and economic crisis of our time. One that took us to the brink, just 14 short months ago.

In a moment of uncharacteristic focus on this matter, the Wall Street Reform and Consumer Protection Act of 2009 passed in the House of Representatives this month. Nothing has been decided, mind you. This is simply a first step in crafting a final regulatory reform proposal that will require a companion Senate proposal, followed by days of debate and horse trading over the final details of such legislation.

It is a process that is impacted by so many elements. There is a tremendously strong and active business and commercial lobby, that has been out in force to protect their turf and keep new regulations to a minimum. There is the fact that a 4500 rally in the Dow and similar indexes have dampened the urgency of the moment (maybe we don’t really need these reforms after all, people are beginning to say). And finally, there is just the great complexity of getting both the level, and depth, of the regulatory response correct.

What is easily lost in this cacophony of circumstances is making sure we focus on the key things that will prevent us from a repeat, i.e., cascading economic collapse taking to the brink. Mind you, we will always have cycles — and bubbles — and declining markets, but they must not be allowed to take us to a point of systemic collapse. Every tax-paying, college-saving and retirement-planning citizen in this country has too much to lose.

The House bill does include several important improvements. But it falls well short of ensuring a more effective, better-funded Securities and Exchange Commission, a systemic risk oversight system that will work, and proper oversight of both over-the-counter derivatives and private fund managers. Soon, it will be the Senate’s turn to advance their proposals. Here is my holiday wish list for them:

SEC Funding: The SEC should have both more stable long-term funding and a self-funding mechanism that maintains sufficient resources and enhances independence. Think of it as Madoff repellent.

Systemic Risk Oversight: This is the most important thing to get right. We desperately need a more independent and robust review of risk factors that could lead to systemic failure. To achieve this level of independence, we need a new oversight board (not existing regulators), with independent, full-time staff and systemic experts to identify, monitor and prevent bubbles from becoming too big to manage.

OTC Derivatives: As much as anything, the lack of oversight and controls on these instruments is what took us to the brink. These instruments should be required to be electronically cleared and traded on regulated exchanges with very limited exceptions. The Senate should take a more comprehensive approach to federal oversight of all derivatives.

Regulation of Investment Managers: The unregulated activities, lack of transparency and questionable practices of these private asset management firms continue to be significant concerns to investors. The Senate can serve investor interests by requiring all fund managers holding themselves out to the public, without regard to size, type or domicile, to register with the SEC and be subject to oversight.

May all our dreams for investors come true this holiday season.

Kurt Schacht is a managing director for the CFA Institute, which administers the Chartered Financial Analyst designation, CFA.

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