When Treasury Secretary Henry Paulson released his agency's proposed "Blueprint for Regulatory Reform'' in March, a variety of critics lined up to attack the 218-page plan.

Some assailed it for not specifically prescribing solutions for the unfolding housing crisis. Others said the overhaul would simply shuffle the regulatory deck chairs rather than strengthen oversight of financial markets. And some said the proposal could stifle innovation. Few offered remedies of their own, and fewer still effectively countered the premise that the U.S. financial regulatory system is archaic and unable to deal with the complexities of today's capital markets.

To fully understand the plan -- and to weigh its importance in the context of the tumultuous last week on Wall Street -- it's instructive to go back to early 2007, when Treasury officials began their work. Paulson asked his team to come up with a modern regulatory model that would make the U.S. financial system more competitive with foreign markets. Please note the emphasis on competition. Even today, as the bailout tab rises, Paulson clearly understands the intricate balancing act between smart oversight and regulation that punishes innovation.

The extent of the mortgage securities problem wasn't known when the work began. By the time the blueprint was released a year later, it was clear that the situation was worsening. The timing of the release made the blueprint a Page 1 story for a day, but it also negated any deep discussion of its substance.

Some have accused Paulson of trying to use the mortgage crisis to advance his agenda for reform. That simply doesn't make sense. In an election year, Paulson and his colleagues must have known that Congress wasn't going to rush to adopt their plan.

What the Treasury did provide, however, was a set of recommendations that can serve as a solid starting point for Congress and the next administration. It's also one that recognizes the limitations of regulation. "I am not suggesting that more regulation is the answer, or even that more effective regulation can prevent the periods of financial market stress that seem to occur every five to 10 years,'' Paulson said in March. "I am suggesting that we should and can have a structure that is designed for the world we live in, one that is more flexible, one that can better adapt to change, one that will allow us to more effectively deal with the inevitable market disruptions, one that will better protect investors and consumers, and one that will enable U.S. capital markets to remain the most competitive in the world.''

Both the McCain and Obama campaigns were calling for regulatory reform last week. Without details, that's nothing more than campaign talk. Paulson offers specifics, including an expanded role for the Federal Reserve that would give it new regulatory authority to oversee the entire financial services industry as "market stability regulator.'' In a sense, that's the role the Fed is playing today.

Despite what you might hear from the presidential candidates between now and Nov. 4, we don't have to start from scratch on regulatory reform of the financial services industry: There's already a sensible blueprint for change.