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Blueprint for Regulating Financial Industry Unveiled

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Blueprint for Regulating Financial Industry Unveiled

Economy

Blueprint for Regulating Financial Industry Unveiled

Blueprint for Regulating Financial Industry Unveiled

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Treasury Secretary Henry Paulson issued a sweeping proposal to overhaul how U.S. financial companies are regulated. The proposal does not address the immediate crisis, but seeks to lessen the impact of crises in the future.

Note: Experts quoted in this piece on Treasury Secretary Paulson's proposal include: Hal Scott, professor of finance, Harvard University; Nouriel Roubini, professor of economics, New York University, and founder of Roubini Global Economic Monitor; Lou Crandall, chief economist, Wrightson ICAP; and Travis Plunkett, legislative director, Consumer Federation of America.

White House Proposes Financial-System Overhaul

Steve Inskeep and Jim Zarroli on the Plan

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Treasury Secretary Henry Paulson is proposing the most sweeping overhaul of regulations for the financial industry since the Great Depression, saying Monday that the measures are not meant to remedy immediate economic concerns.

Paulson said the proposal is an "aspirational model" for regulation, designed to be flexible, but that it should not be implemented until the difficulties are resolved.

"This blueprint addresses complex, long-term issues that should not be decided in the midst of stressful situations and should not be implemented to add greater burden to a market already under strain," Paulson said.

"These long-term ideas require thoughtful discussion and will not be resolved this month, or even this year."

The proposal gives the Federal Reserve new powers to act as a "market stability regulator," including authority to examine the books of any financial institution — not just banks — that might pose a threat to the stability of the financial system.

The rising tide of bad debt has made it harder for consumers and businesses to get credit and sparked fears of a recession, which many economists believe is already here.

Business groups are split on Paulson's newly recommended approach, and banking lobbyists are critical of some of the details affecting their industry.

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