Can Paulson Muster the Support to Push His Plan Through?
By MICHAEL CONNOLLY
Two big shifts underlie U.S. Treasury Secretary Henry Paulson's blueprint for sweeping changes in how the U.S. government monitors financial markets to be unveiled Monday: The Federal Reserve could emerge with significantly enhanced powers to oversee financial markets, and the plan represents a big land grab by federal regulators at the expense of their counterparts at the state level, especially in the insurance industry.
As Randall Smith, Susanne Craig and Robin Sidel report, critics have long complained that the existing system involves too many agencies with overlapping jurisdictions and that it leaves too many areas uncovered. Mr. Paulson is expected to recommend that the central bank play a greater role as a "market-stability regulator," with broader authority over all financial market participants, and his plan will include merging some agencies.
Opposition is already emerging from critics who feel the plan nods too far toward deregulation. The revamp process began early last year before the credit crunch and was initially aimed at improving American competitiveness. As such, it is a hybrid that both adds new rules to deal with recent financial woes and also simplifies old structures in a way that favors some in the finance industry. Critics argue that the goal should be far tougher regulation on Wall Street, in particular to protect small investors from being duped into buying risky securities they don't understand. Given the emerging dissension, will Mr. Paulson be able to muster the support to push the plan through anyway?
Read Randall Smith, Susanne Craig and Robin Sidel's report on the new plan:
Read our report from Washington on the plan:
Read Gerald F. Seib's Capital Journal column on how Washington political gridlock might slow the plan:
Read Joanna Slater's report on the U.S. stock market outperforming most other markets:
Read Ann Davis's report on the fly-by commodities correction:
Read Bob Davis's report from Washington on poor countries increasing their IMF voting power only incrementally:
