The Paulson plan is window dressing. It is the Congress who has the authority to create and regulate the currency and credit, not the Executinve (Treausry); though clearly the treasury enforces the rules.
Look, we (the taxpayer) are going to pay for whatever mess the banks get themselves into, all ni the name of "stability". We have the resopnsibility. The constitution also gives us the authority (through our representatives). We need congress to retake the Fed and reorganize/replace or otherwise develop a better more accountable system. Please see "TakeBackTheFed.com".
ECONOMY
Inside the Paulson Plan
Will overhauling the financial system work?
Saul Loeb
/
AFP-Getty Images
Agent of Change?: Treasury Secretary Henry Paulson
Mar 31, 2008 | Updated: 12:55 p.m. ET Mar 31, 2008
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Treasury Secretary Henry Paulson's proposed sweep of financial regulation would emphasize more control at the federal level, at the expense of state oversight, and consolidate an alphabet soup of existing agencies.
It is an idea that has been kicking around for a while, and one that is bound to provoke heated debate on Capitol Hill and among the various banking and market oversight agencies, which are already tripping over each others' turf. It is also bound to please some circles of Wall Street because the plan, while strengthening the Federal Reserve's role over certain aspects of the markets, like risk taking, would also emphasize greater self-regulation over other aspects, including business conduct.
Paulson's plan is a recognition that Wall Street has pushed beyond regulators' abilities to keep up with innovation. Asset securitization and other structured finance activities, where the credit crisis was created, didn't exist at the time the federal banking agencies were established decades ago. And since the repeal of Depression-era laws separating risky brokerage activities from consumer deposit safeguarding, Wall Street and major commercial banks have increasingly been competing in trading, stock and bond underwriting, and other risk-taking activities.
Even the markets have morphed. The major U.S. stock exchanges have moved into trading options and bonds and have gone across the Atlantic to merge with major European exchanges. Futures trading is their next ambition. Meanwhile, the major U.S. futures exchanges have been merging, giving rise to electronic trading networks and plans by the big Wall Street firms to set up rival markets.
Wall Street's main lobby group, the Securities Industry and Financial Markets Association, embraced Paulson's proposals. "Our present regulatory framework was born of Depression-era events and is not well suited for today's environment where billions of dollars race across the globe with the click of a mouse," said Tim Ryan, chief executive of the association. "That fact, teamed with the current market conditions, result in an universal agreement that it is time to modernize and revitalize the current system."
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