There is much work left to do in reforming the nation's financial system, despite important improvements after the crisis that hit banks, other financial institutions and homeowners a year ago, Sen. Tim Johnson said Wednesday.

"I think it was largely a matter of too little regulation," the South Dakota Democrat said of the financial meltdown that shook up the 2008 presidential campaign and inspired Congress to pass an emergency $700 billion Troubled Asset Relief Program for the financial industry last fall. "So regulating the banks and especially the nonbank-type financial institutions needs to go on."

Johnson met Wednesday morning in his office with Federal Reserve Chairman Ben Bernanke, where they discussed signs of improvement in the economy. Those include a rise in retail sales, improvements in the stock market and repayment, with interest, by financial institutions some of the billions they received through TARP last year.

"That TARP money is being paid back, and the taxpayers are earning 17 percent on that investment," Johnson said. "Some are paying back sooner than expected and repaying more. As the economy recovers, more banks will repay."

Bernanke, who has been nominated by President Barack Obama for another term as chairman of the Federal Reserve, said he believes the two-year recession is over, even though troubling challenges remain.

"(Bernanke) pointed out that the economy is coming back, but unemployment is still very high," Johnson said.

Johnson said he's hopeful that with a stronger framework of regulations in place, another meltdown of the economy can be prevented. Much of that regulatory work could take shape in the Senate Banking Committee, where Johnson is a senior member. Separate bills dealing with such regulation and with consumer protection are to be introduced to the committee soon.

Johnson also worries about what appears to be continuing risky investment tactics of some banks and other financial institutions, as well as failures to provide enough much-needed credit to people who need it most.

"These are necessary and important issues to tackle," he said. "The devil's in the details. We need to address these situations without making the economic situation worse."

Contact Kevin Woster at 394-8413 or kevin.woster@rapidcityjournal.com