BulletProofBlog the blog on crisis communications

Treasury Secretary Timothy Geithner took to Capitol Hill yesterday to unveil the government's plan for a massive expansion of how the marketplace is regulated - an effort the likes of which have not been seen since The Great Depression.

Today, the financial industry is face-to-face with a total overhaul of how markets operate. Wall Street' s ways of the past and perceived sense of entitlement have now ushered in a shift from freewheeling capitalism to an environment that will almost certainly have more safeguards and speed bumps.

Among the highlights of this plan are measures that would extend regulation to derivatives trading and hedge funds; set new capital reserve and risk standards; encourage companies to compensate employees based on long-term performance rather than short-term successes; put a single federal regulator in charge of guarding against systemic risk; and empower the federal government to seize any company (currently, only banks are subject to government takeover) whose imminent failure could cause major disruption to the financial system.

Importantly, while the era of greater accountability is a foregone conclusion, Secretary Geithner' s approach is not necessarily the way in which it will be implemented. Nearly all of the measures he proposed will require legislative action - providing time (but not much) for financial leaders to communicate their own approaches to self-regulation, and why those steps are preferable to the Obama Administration' s plan.

Change is here. The only question is who will direct it. If business, rather than government, is to assume the leadership position, then Wall Street and Corporate America must step forward with its recommendations now, rather than hide from the reforms that are sure to come.