From Deseret News archives:

Fed to become uber cop?

Published: Tuesday, April 1, 2008 12:18 a.m. MDT
 |  E-MAIL | PRINT | FONT + - 
It's a Herculean task: revamping a financial regulatory system dating back to the Civil War to deal with 21st century crises imperiling the nation.

Under an ambitious Bush administration plan unveiled Monday, the Federal Reserve would take on the unwieldy role of uber cop in charge of financial market stability. Other regulatory agencies could see their influence diminished.

The proposal won't fix the host of economic and financial problems that threatens to plunge the United States into a deep recession, but the plan might help guard against future troubles. It would take years and a lot of political wrangling — in Congress, on Wall Street, in statehouses and elsewhere — to implement all the changes envisioned.

Yet the initiative casts a fresh spotlight on the best way to protect the nation from financial catastrophes. That debate probably will take center stage in the next president's administration.

Asked if President Bush's goal was to get the revamp approved before he leaves office, press secretary Dana Perino acknowledged the enormity of the plan. "We'll have to see. It is a big attempt," she said.

Story continues below
The plan would greatly expand the role of the Fed to oversee the stability of the entire financial system, including commercial banks, investment banks, insurance companies, hedge funds, private-equity firms and others.

Rather than checking on the health of a particular organization, the Fed's focus would be on whether a firm's or industry's practices pose a danger to overall financial stability, said Treasury Secretary Henry Paulson, the former head of investment giant Goldman Sachs, whom Bush put in charge of the plan.

"It will have broad powers and the necessary corrective authorities to deal with deficiencies," Paulson said.

Kelly Matthews, economist and executive vice president of Wells Fargo & Co. in Salt Lake City, said the proposal will face a lot of debate.

"By and large, it is probably a good first step," he said. "We all recognize we can make some improvements, but we want to keep separation in our minds about what needs to be done immediately to address the mortgage situation, and not get that intertwined or mixed up with regulatory reform."

Former U.S. Sen. Jake Garn said Monday that he likes the concept, having spent 18 years on the Senate Banking Committee with oversight of the various agencies.

"In general, to consolidate and streamline would make sense to me," Garn said. "There's always been some confusion between the different agencies."

Recent comments

Let's do a quick history lesson. The Federal Reserve was created to...

BBKing | April 1, 2008 at 8:25 a.m.

previousnext

Latest comments

A popular sense of justice and public demand for revenge might make it sound...

Yes, its the only way to save our Philistine brethren! Oh wait, we are...

"Next year is huge rebuilding year what with losing Pitta and the winningest...

Gay-friendly curriculum phased out

["Who should we be bullying? Do we really need to specify people that should...

I'd have to agree with the disaster of Maynor and Matthews trying to prove...

what article did you all read? your comments make no sense! there was no...

Knitting hearts together

So you're an expert in knitting and all known "archealogical" digs, correctly...

We need more of these sanctions and they need to be even harder...three years...

BYU football: Bronco weighs in on Hall

You have failed to post any quotation of or link to the PDD statement saying...

Letters: Not a Tiger anymore

I don't care about Tiger Wood's personal life. He's a golfer not a saint.

Advertisements