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".
Inside the Paulson Plan
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No one is saying the system should stay the same, that's for sure. But so far the Bush administration's proposals have stopped short of much stricter, or even permanent, oversight of investment banks. Even Paulson's plan would limit the Fed's oversight of Wall Street firms to times of extreme market stress, when investment banks approach it to borrow money directly, as they are now allowed to do. And it would preserve, if not enhance, the power of self-regulatory organizations like the major stock exchanges to police market conduct themselves.
Critics of the current system have argued that there are too many ways for ill-intentioned market participants to operate around existing rules. Democrat Charles Schumer, a member of the Senate Banking Committee, said in a statement late Friday, "In broad outlines, we agree with large parts of Secretary Paulson's plan. He is on the money when he calls for a more unified regulatory structure." But the New York senator added the plan should address the issues of complex structured finance activities, which in large part contributed to the credit crisis.
Last week, Massachusetts Congressman Barney Frank said Congress should authorize the Fed to act as a risk regulator across the markets. "To the extent that anybody is creating credit, they ought to be subject to the same type of prudential supervision that now applies only to banks," he said.
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