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The Fed Reserve System has been digesting and analyzing the lessons learned from the recent episode and is exploring steps to strengthen supervisory practices and processes accordingly. More broadly, many observers have urged a restructuring or reengineering of our approach to financial regulation [Working Group on Financial Reform 2009]. No doubt much will be said about financial regulatory reform in the months ahead, and a discussion of the relevant issues would be beyond my scope here. I will just offer the observation that restoring compatibility between the scope of government support and the scope of government supervision seems essential to a healthy and sustainable financial system. That vantage point suggests that when we do get around to considering concrete proposals for our financial regulatory structure, our choices about whom to regulate and how to regulate them ought to be driven by our decisions about who is eligible for public sector credit and under what conditions. In 1983, John Kareken of the University of Minnesota and the Minneapolis Fed described financial deregulation as "putting the cart before the horse," suggesting that expanding the powers of banking and thrift institutions without appropriate attention to design of the financial safety net could be a risky move [Kareken 1983]. His analysis was prescient, given the savings and loan debacle that followed later in that decade. Kareken's [1983] emphasis was on deregulation in the presence of deposit insurance; but in the current episode, lending by the Fed and the Treasury has become just as important a part of the Fed financial safety net. Nobody is talking about deregulation now, but the same principle applies: namely, redesigning our financial regulatory system before establishing the boundaries of the financial safety net would be like putting the cart before the horse.