By Renuka Rayasam, Associate Editor September 24, 2009 Reforming the regulatory structure for the U.S. financial industry was never going to be smooth sailing, but there was a time when the general consensus was for bold action. A year ago, everyone was upset at the need for a government bailout, with both parties agreeing that something should be done to harness bank behavior. Voters were ready to see heads roll after the economic meltdown that pushed up unemployment and choked off credit. Bank lobby groups were hard pressed to object too strenuously after their members held out hands for taxpayer bailout money. But a year later, the Obama administration and Congress are already hitting choppy waters.That's partly because every lawmaker and regulator has his or her own idea about how best to chart the course into unexplored territory. Unlike in the health care debate, here the administration weighed in early with its own plan about how to keep financial firms from causing economic meltdown. But it hasn't won many converts. Regulators are making their rounds on the speaking circuit trying to protect their own turf. And senators and representatives are in the process of writing new legislation that tries to appease voters and placate lobby groups reinvigorated with time. There's agreement on general principles: boosting consumer protections, eliminating risky lending behavior and making financial failures less disruptive to the economy. Differences lie in how far to go in every arena. Already Rep. Barney Frank (D-Mass), who heads the House Financial Services Committee, has ceded some concessions to business groups, by saying he intends to limit the power of a proposed consumer protection agency. The U.S. Chamber of Commerce still isn't satisfied. And bank lobby groups continue to fight against the idea of such an agency at all. On the other side of the Capitol, Sen. Chris Dodd (D-Conn), head of the Senate Banking Committee, has thrown everyone for a loop by announcing his intention to consolidate myriad oversight agencies into a single banking regulator. It is a plan that FDIC chairwoman Sheila Bair, Federal Reserve chairman Ben Bernanke and other agency heads won't bless. The Obama administration wants to combine only two agencies, the OTC and the OCC, leaving the others intact. Advertisement The lack of consensus will make it harder for the administration as it tries this week to convince world leaders at the G20 meeting in Pittsburgh that American regulatory reform won't crimp international cooperation. It will be a tough sell as world economic leaders hash out accounting standards and guidelines on how much capital banks should hold. Meanwhile financial firms still move in the same regulatory regime that existed when the seeds of the crisis were sown years ago. It won't be until early next year before differences get settled. Even then, the new rulebook may not be enough to keep the next crisis at bay.