WASHINGTON — The troubles that brought down Wall Street's once mighty Bear Stearns underscore the government's need to develop a clearer and more encompassing set of rules to oversee the country's major financial players, Treasury Secretary Henry Paulson said Wednesday.

In a speech to the U.S. Chamber of Commerce, Paulson said the Bush administration will soon release just such a blueprint for institutions such as investment houses. He said the aim would be to promote the smooth functioning of financial markets.

For months the financial markets — rocked by the double blows of a housing and credit crises — have been suffering through extreme turmoil, threatening to plunge the U.S. economy into a deep recession. The modern U.S. financial system is a complex web of financial players — institutions and individuals and practices that are subject to different rules and regulations. Commercial banks, long a financial bedrock, are subject to regulations and supervision.

"This latest episode has highlighted that the world has changed as has the role of other nonbank financial institutions and the interconnectedness among all financial institutions," Paulson said. "These changes require us all to think more broadly about the regulatory and supervisory framework that is consistent with the promotion and maintenance of financial stability," he added.

In extraordinary actions aimed at preventing a meltdown of the U.S. financial system, the Federal Reserve recently backed JP Morgan's takeover of Bear Stearns and agreed to provide an important multibillion dollar financial lifeline for the deal. In addition, the Fed, in the broadest use of its lending authority since the 1930s, said it would let squeezed Wall Street investment houses go directly to the Fed for emergency loans. That has long been a privilege just for commercial banks.

Paulson said he "fully supported that action" but said it also raises important policy considerations about the oversight of investment houses.