As the global financial system teetered on the brink of collapse in September 2008, policymakers and regulators around the world responded with unprecedented speed and boldness. They injected hundreds of billions of dollars of capital into financial institutions and extended trillions of dollars worth of debt guarantees, effectively declaring that no more major banks would fail. In addition to those short-term remedies, they promised to undertake sweeping regulatory reforms to tighten control of financial institutions and put an end to the culture of loose credit, lax oversight and distorted incentives that many have blamed for causing the turmoil.

“We need to prevent a crisis like this from ever happening again,” Treasury Secretary Timothy Geithner said in unveiling the Obama administration’s reform proposals.

But one year after the collapse of Lehman Brothers Holdings, efforts to overhaul the financial system to make it safer and sounder have run...