2008 Woodie Awards
Debate expected over new Bush financial plan
By: THE ASSOCIATED PRESS
Issue date: 3/31/08 Section: Nation
WASHINGTON - In proposing the broadest overhaul of financial oversight since the Great Depression, the Bush administration has kicked off a fierce debate.
It pits those eager to revamp an antiquated system against an industry opposed to excessive regulation. The administration is aware of the hardening lines.
The 200-page plan set for release today comes with the financial system in the midst of the most severe credit crisis in two generations.
That crunch has meant billions of dollars of losses for big banks and investment houses.
It has caused the near-collapse of the country's fifth largest investment bank, made it harder for consumers and businesses to get loans and pushed the country to the brink of a recession.
The market turmoil has presented an opening for critics to make the case for strong federal rules to crack down on abuses that they believe were at the heart of the current crisis.
But Treasury Secretary Paulson, who has led the effort to rewrite regulations, rejects that criticism.
"I do not believe it is fair or accurate to blame our regulatory structure for the current turmoil," according to a draft of a speech he planned to give today when he outlines the administration's proposals.
In interviews over the weekend, administration officials sought to frame the proposals as an effort to devise a system that would help keep U.S. companies competitive in an increasingly connected global economy.
"Despite the fact that there will be a temptation to view this through a lens of what is happening now in credit markets, this has been a process that has been going on for a year," said David Nason, Treasury's assistant secretary for domestic finance.
"These are very complex issues that require a serious amount of debate."
Treasury began work on the review in early 2007.
It came in response to complaints from the financial services industry that U.S. businesses were losing their edge in global competition because of over-regulation by Washington.
The yearlong review produced a plan calling for the greatest changes in financial regulation since many of the current oversight institutions were created in the 1930s.
The Federal Reserve would be a big winner, gaining new powers to serve as the protector of stability for the entire financial system.
The plan would abolish some institutions such as the Office of Thrift Supervision and the Commodity Futures Trading Commission; their responsibilities would shift to other agencies.
It pits those eager to revamp an antiquated system against an industry opposed to excessive regulation. The administration is aware of the hardening lines.
The 200-page plan set for release today comes with the financial system in the midst of the most severe credit crisis in two generations.
That crunch has meant billions of dollars of losses for big banks and investment houses.
It has caused the near-collapse of the country's fifth largest investment bank, made it harder for consumers and businesses to get loans and pushed the country to the brink of a recession.
The market turmoil has presented an opening for critics to make the case for strong federal rules to crack down on abuses that they believe were at the heart of the current crisis.
But Treasury Secretary Paulson, who has led the effort to rewrite regulations, rejects that criticism.
"I do not believe it is fair or accurate to blame our regulatory structure for the current turmoil," according to a draft of a speech he planned to give today when he outlines the administration's proposals.
In interviews over the weekend, administration officials sought to frame the proposals as an effort to devise a system that would help keep U.S. companies competitive in an increasingly connected global economy.
"Despite the fact that there will be a temptation to view this through a lens of what is happening now in credit markets, this has been a process that has been going on for a year," said David Nason, Treasury's assistant secretary for domestic finance.
"These are very complex issues that require a serious amount of debate."
Treasury began work on the review in early 2007.
It came in response to complaints from the financial services industry that U.S. businesses were losing their edge in global competition because of over-regulation by Washington.
The yearlong review produced a plan calling for the greatest changes in financial regulation since many of the current oversight institutions were created in the 1930s.
The Federal Reserve would be a big winner, gaining new powers to serve as the protector of stability for the entire financial system.
The plan would abolish some institutions such as the Office of Thrift Supervision and the Commodity Futures Trading Commission; their responsibilities would shift to other agencies.
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