The New York Times has a front page story today about how Washington is considering some type of legislation that will increase the regulatory oversight on financial services firms much like how, in the wake of the Enron and Wolrdcom collapses, Sarbanes-Oxley changed how accounting firms and corporations could operate.

The fact that there are few specifics in the good story by Ed Andrews and Steve Labaton about what the increased regulations might be isn't surprising.  The discussions among policymakers are only a few weeks old and, as the story points out, really only got some momentum a week or so ago when the Federal Reserve began to take actions that could be called a Wall Street bailout. 

As is typical in Washington, federal assistance of this type is often accompanied by something that looks, sounds, and feels like a cost or penalty being imposed.  That makes the policy action far more politically acceptable even if it's really correcting a problem that has already occured rather than preventing the next one from occurring.

If, as some are saying (or is it fervently hoping?), the Bear Sterns situation and Fed decision to allow Wall Street firms to borrow from it are not followed up with another institution failing and there is no further need for federal intervention, the chances of a financial services Sarbanes-Oxley will be limited.

But the implication in the Times story that Wall Street will be able to run out the clock (sorry, too much basketball this weekend) by working with the anti-financial services regulation oriented Bush adminstration to stall action is wrong.  If the troubles on Wall Street continue through November, the White House may not be able to stop the legislation from being considered and a presidential veto might be overridden just before the election.

And if the problems continue past the election, the next Congress and White House will have far fewer problems making a financial services Sarbanes-Oxley one of the first orders of business in January 2009.