The government must move quickly to give the Federal Reserve more powers to regulate the financial system and to readily deal with problems, such as this year's volatile financial market, Treasury Secretary Henry Paulson said Thursday,
Paulson said that the central bank's powers should be expanded in the wake of the near collapse earlier this year of Bear Stearns, the giant Wall Street investment firm.
He said there was a need to consider quickly how to give the Fed the power it needs to obtain information from investment banks.
"Our nation has come to expect the Federal Reserve to step in to avert events that pose unacceptable systemic risk," Paulson said. "But. the Fed has neither the clear statutory authority nor the mandate to anticipate and deal with risk across our entire financial system."
Two months ago, Paulson revealed a guide that government insiders say, if passed, might prove be the the most enduring repair of the nation's financial regulatory system since the events leading to the great Great Depression of the early 1930's.
At the time, he said Congress should consider ways to expand the Fed's powers to oversee investment banks. But he set no time frame for when this should occur.
In his speech Thursday, he said the government should act very soon.
"We should quickly consider how to most appropriately give the Fed the authority to access necessary information from highly complex financial institutions and the responsibility to intervene to protect the system so that they can carry out the role our nation has come to expect - stabilizing the overall system when it is threatened," he said.
Source: The Associated Press