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Congress takes a break this week, but behind the scenes there continues to be intense debate around three main issues.

First, should there be a Pecora-type commission to investigate either how we found ourselves in a major financial crisis or – more specifically – some aspect of presumed wrongdoing, such as the way dubious mortgages were thrust upon people.

Elizabeth Warren has just had a big win with the announcement of a new regulatory agency to cover financial products. Perhaps the mandate and guidelines for this agency will emerge from such hearings. The ball seems to be somewhere between President Obama and Nancy Pelosi on this issue.

Second and closely related, members of Congress and key interest groups continue to position themselves for the upcoming epic debate on the future of financial regulation in the United States. Seen in that context, the recent credit card legislation should probably be interpreted as indicating that the minimalist approach is still on the table. But there are other, powerful voices within House Financial Services and perhaps other committees.

Third, health care looms as the major long-term budget and philosophical issue. Here all eyes are on the administration. What will they propose and how will the President seek to sell it? Will this be the major defining issue of the fall, or is there a mild and easy compromise in the works?

Added to the mix, of course, is the fiscal crisis in California. Should that state receive a bailout from the federal government, for example in the form of loan guarantees? What would that say about our longer-run federal fiscal solvency? You can have your say below.

By Simon Johnson  |  May 27, 2009; 5:57 AM ET
Categories:  Health care , Regulation , The Week Ahead  
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