Modernized Financial System

In 1999, under President Bill Clinton and a Republican majority, the federal government passed the Gramm-Leach-Bliley Act, repealing elements of the Glass Steagall Act of 1933 - specifically the clauses regulating banks from engaging in commercial, investment, and insurance activities. For the last year or so, we have seen the finger pointing game, blaming the Financial Crisis of 2008 on banks, politicians, consumers, insurers, or whomever falls in the cross fire. Unfortunately, we are now going to look to regulatory reform to resolve a problem, that in my mind, was a direct result of a regulatory blunder to begin with. I guess if we had listened to Senator Dorgan back in 1999 maybe the fallout from the financial crisis may have been minimized or even avoided all together.

In the spirit of social, economic, and political progress....

What should the federal government do to modernize our financial system?
How will we account for financial innovation and economic force majeure?
Does the banking industry require restructuring or divestiture?
Are the concepts of privatized banks producing an implicit moral hazard?

Feel free to comment if you have any ideas or thoughts in this topic.