U.S. Treasury Secretary Henry Paulson on Monday announced the biggest overhaul of the country's financial regulatory system since the Great Depression. Speaking at the Treasury Department, Paulson described changes in the way the government regulates both big and small business. n to the local insurance agent and mortgage broker. The plan, which requires congressional approval for its biggest changes, has already drawn fire from Democrats who say it fails to impose sufficient oversight on mortgage lending and securities trading – two areas believed to be key to the current credit crisis. The new system would increase the Federal Reserve's ability to protect the stability of the entire financial system while merging day-to-day bank supervision into one agency, down from five at present. One new agency would also be created and charged with overseeing business conduct and consumer protection, performing many of the functions of the current Securities and Exchange Commission. Congress will also be asked to establish a federal Mortgage Origination Commission to set recommended minimum licensing standards for mortgage brokers. It would also seek to establish new oversight of the insurance industry by asking Congress to set up an Office of Insurance Oversight inside the Treasury Department. Paulson acknowledged that most of the changes will not be realized until the next administration, but he said the Bush administration would continue to focus on getting through the current credit crisis. The secretary rejected Democratic criticism that poor regulation was responsible for the current problems in the mortgage and credit markets. lems. “I do not believe it is fair or accurate to blame our regulatory structure for the current market turmoil,” he said. “I am not suggesting that more regulation is the answer or even that more effective regulation can prevent the periods of financial market stress that seem to occur every five to 10 years,” he said.
