The plan announced by the president would give the Federal Reserve greater supervisory authority over large financial institutions whose problems pose potential risks to the economic system. In doing so, the plan seeks to give Washington the tools to police the shadow system of finance that has grown up outside the government’s purview, and to make it easier for regulators to head off problems at large, troubled institutions or take control of them if they fail. “Unfortunately the growth of the nonbank sector as well as all the complexities and financial instruments outstripped those old regulatory regimes,” Obama said in an interview on Tuesday with The New York Times and CNBC.

Although it would strikingly reorganize the regulatory architecture, the president’s plan results from many compromises with industry executives and lawmakers, and is not as bold as some had hoped. Obama seemed to acknowledge as much when he posed the question: “Did, you know, any considerations of sort of politics play into it? We want to get this thing passed, and, you know, we think that speed is important. We want to do it right. We want to do it carefully. But we don’t want to tilt at windmills.”

At the White House and the Treasury Department in recent weeks, some insurance companies sought a law that would enable them to get a single federal charter instead of multiple state charters. The insurers lost. Consumer groups argued against the banks in favour of a consumer financial protection agency with broad new authority to protect homeowners from unsuitable loans. The consumer groups prevailed.