Congress and the administration are often described as failing to address America’s problems, and the war in Afghanistan and the leak in the Gulf are leading the list of problems in search of solutions.

But the president and Congress appear ready to take a major step toward addressing the causes of the U.S. economic crisis. By July 4, a bipartisan effort is expected to establish a broad financial reform law. Though no one can be sure how it will all work out, the Restoring American Financial Stability Act addresses many of the problems, missteps and oversights that helped plunge the economy into a deep recession.

There is plenty of criticism of the financial overhaul bill. But hearing criticism from all sides, we find reason to hope that it combines ambition with moderation. Our general impression is that the bill limits the ability of financial institutions to shatter our economy, while still giving them room to conduct business effectively.

More specifically, it enables federal regulators to seize and break up large firms facing collapse. Such liquidations, financed by the banking industry, provide an alternative to the “too big to fail” crisis that forced the government to devise rescues for endangered financial institutions.

It limits the ability of banks to speculate in financial markets, and establishes a system to regulate the trading of financial derivatives. An amendment sponsored by Sen. Susan Collins requires major banks to keep adequate capital on hand, based on the size and risk of their holdings.

It raises the level of FDIC insurance on depositors’ accounts to $250,000, and takes a step toward setting stricter standards for brokers. It also sets minimum standards for home mortgages and prohibits bonuses and other incentives for mortgage brokers to steer consumers into high-priced loans.

Along with many reforms aimed at leveling the financial playing filed for lenders and consumers, it establishes a Consumer Financial Protection Bureau within the Federal Reserve. The agency will have its own budget and will monitor mortgages and other consumer debt, though automobile finance companies will be exempt.

Stocks of financial institutions rose after the deal was announced, perhaps because the requirements weren’t as onerous as expected. Some critics see this as evidence that that bill has too many loopholes. Republicans have criticized it for failing to deal with the continuing crisis facing Fannie Mae and Freddie Mac as the chief underwriters of the U.S. mortgage market.

The bill also relies on agency rulemaking to actually implement many of the intended reforms.

Though clearly not perfect, the bill appears to be a step forward for consumers, while limiting the mischief that financial opportunists and high-rollers can inflict on the U.S. economy.

— Questions? Comments? Contact Managing Editor Nick Cowenhoven at nickc@journaltribune.com.