Treasury Secretary Timothy Geithner
Treasury Secretary Timothy Geithner REUTERS

U.S. Treasury Secretary Timothy Geithner sounded a mildly upbeat note on capital markets regulation reform Thursday, detailing the work various branches of the federal executive have done, the results so far and his outlook for 2012.

If you look across these areas you can see we are making considerable progress. We're taking the time to make things right, Geithner said, after having mentioned new minimum capital requirements, still-in-progress rules for the credit derivative markets and the overhaul underway in the nation's housing refinance framework.

The Secretary also mentioned the establishment of the Consumer Financial Protection Bureau, rules for money market funds and the establishment of a new bankruptcy type framework (for large financial institutions) that prevents bailouts as other examples of regulatory progress.

We have shut down and restructured the weakest parts of our system, Geithner said.

Addressing the political complexities of financial reform, Geithner appeared to calculate the connotations and nuances of his every word, taking pains not to demonize the financial industry. At one point he mentioned those who are working to slow the pace of reform, paused for effect, and concluded will only increase uncertainty and damage our efforts to get the rest of the world to adopt a level playing field.

That rhetorical approach contrasted to the one adopted by President Obama in last week's State of the Union Address, where the President pledged he would not go back to the days when Wall Street was allowed to play by its own set of rules.

New Rules for Money Markets, Housing

Most of Geithner's speech was dedicated to specific regulatory developments: the fact new rules would come down in 2012 to regulate the housing refinance market and non-bank financial institutions like hedge funds.

He also discussed forthcoming rules to prevent a run on the money market and protect segregated consumer accounts. On that latter point, Geithner said the failure of customer account segregation rules to protect the customers of MF Global illustrates that we have some work to do ahead.

Geithner did perk up during the post-speech question-and-answer session, authoritatively denying accusations that Dodd-Frank regulations were stifling U.S. business.

There is no credible element to support the argument that these reforms are having a material negative effect, he said.

In response to a question suggesting rules enacted so far were too soft on reckless risk-taking, he was equally emphatic

No one is concerned more about that risk than me, he said.

Beyond specific progress on policy implementation, Geithner also used the speech to praise the resilience of the U.S. capital markets. Asserting the actors who caused the 2008 financial crisis have been forced out of the financial system, the Secretary said, Our financial system is once again helping support economic growth by meeting the demand for capital.

The U.S. financial system is stronger, is getting stronger, and is now in a significantly better position than it was before the crisis, Geithner said.