Overhaul of Financial Regulations Sought

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WASHINGTON -- Today the Bush administration is revealing new regulations to prevent future credit crisis. Should the plan go into effect, the Federal Reserve would end up getting more power.

It could be the biggest change to the country's financial system since the Great Depression.

Retooling the System

 With a credit crisis that has wreaked havoc on the economy, the Bush administration is looking to put a plan in place that will prevent similar problems in the future.

"As we work our way through this turbulence, our highest priority is limiting its impact on the real economy," Secretary of the Treasury Henry Paulson said.

This morning Paulson proposes changes to the nation's financial system by streamlining the confusing oversight of banks and other financial institutions.

The plan contains three main highlights.

First, the Federal Reserve would be designated as the primary regulator for market stability. That means it would have more power to examine the records of any financial institution it believed posed a risk to the system.

In addition, certain financial regulatory agencies would merge and shift to better police the entire system.

Also, in addressing the mortgage crisis, a new commission would be created to establish national standards on mortgages, but leave enforcement to the states.

Dems: Good Try, But More is Needed

"It's a good half step toward regulatory reform, but it needs to be beefed up. In particular the safeguards against abuses on Wall Street need to be much strengthened," said Peter Morici of University of Maryland's College of Business and Management.

This plan would eventually need to be approved by Congress and while Democrats are calling it a good first step, the devil is in the details. The document released today is 200 pages in length, meaning the plan's passage is by no means a done deal.

In fact, Paulson acknowledges that this more a wish list than anything else and most financial experts believe it could take Congress years to pass it, leaving the matter to be settled by the next President.

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