First, consider the regulations announced for paid tax preparers. The IRS wants preparers tested for competence and registered so they can be more easily identified and held accountable if they mess up a client's tax return.

The purpose is to cut down on errors and fraud in a field with little oversight and a service used by well over half of this nation's taxpayers. (Lawyers, certified public accountants and federally authorized tax practitioners won't be affected because they already are regulated.)

Competency standards and testing procedures are being developed. Once that is done, the new regulations will be phased in over the next few years, giving tax preparers time to meet the new requirements. Annual training sessions and clear penalties for unethical conduct are in store. And an IRS database will give taxpayers online access to preparers' credentials.

Sensibly, there will be only one change this tax season: stepped-up oversight. The IRS is informing thousands of tax preparers who have track records of frequent errors that enforcement will be toughened. It is a solid first step with the rest of the reform package coming along at a reasonable, not rushed, pace.

There is a lesson in moderation here, one that Congress should heed as it prepares to deal with proposed regulatory reforms aimed at preventing another fiscal crisis.

Reckless behavior up and down the financial system led to near collapse and devastating losses for individuals and businesses. Recovery is beginning but anger remains. And that anger must not fuel overreaction by Congress as it works out ways to prevent any repeat of the meltdown.

A prudent response will produce the best results. One of the worst things Congress could do would be to overreact and over regulate, choking what already promises to be a slow, fragile recovery.

Capitalism thrives on freedom, but it also requires responsibility, a requirement that too many people ignored as the financial bubble grew. Now, says President Obama, "Restoring a willingness to take responsibility ... is at the heart of what we must do." And, he quickly added, "in a way that does not stifle innovation and enterprise." Those are good guidelines for Congress.

Remember that a host of regulations affecting banks and brokerages already exist. One of the best ways Congress can serve the public is to review and recommit to its watchdog role, especially making sure that regulatory agencies are properly enforcing existing protections. The Bernard Madoff case is ample proof that regulations designed to protect investors do no good at all when they are not enforced.

Important work lies ahead in Washington and how well it is handled matters not just in the ongoing fiscal recovery but well into the future.