The most innovative regulatory initiatives in the United States tend to occur after financial crises. The Federal Reserve System grew out of the 1907 bank runs, the Securities Exchange Commission and Commodity Futures Trading Commission were regulatory results of the Great Depression, and the Sarbanes-Oxley law that codified corporate governance followed the collapse of major corporations from speculation and accounting manipulation.
We can"t prevent crises, but we can be prepared for them — and right now, we are not. Interventions by the Fed and Treasury have been only stopgap measures to forestall a meltdown. Their task would have been easier if we had decided ahead of time how to structure the emergency response. No matter how hard we try to avoid financial market dislocations, there will always be a "next" crisis; we should be prepared for it. The critical innovation required for this preparation should be the creation of a Crisis Resolution Board.