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.

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."

Kim Smith, a former Goldman Sachs executive who teaches at Brigham Young University about financial markets and risk management, said the proposal "makes sense as a way of rationalizing all the various organizations that are involved in regulating the markets." Combining the Commodity Futures Trading Commission and the Securities and Exchange Commission is one example, he said.

Lyle Gramley, former Fed official and now senior economic adviser at the Stanford Washington Research Group, believes the plan isn't clear about the Fed's corrective powers.

Others expressed concern about concentrating too much power at the Fed while also streamlining or consolidating the duties of other regulators. They feared that a safety net of checks and balances could be lost.

"The cataclysmic mistake is that if you eliminate so many 'eyes' that monitor the markets, and the single eye, no matter how super, misses something, then catastrophe," said Anthony Sabino, a professor of law and business at St. John's University.

At the same time, the Fed would lose daily supervision of big banks, something the Fed probably would fight to keep intact, Gramley said. Taking away that supervision is a problem, because the Fed is also the lender of last resort for commercial banks, he said.

Day-to-day banking supervision would be consolidated into one agency, compared with the current five. The Office of Thrift Supervision, which oversees savings and loans, and the Commodity Futures Trading Commission, which oversees the trading of gas, oil and other commodities, would be eliminated, with their functions merged into other agencies.

Walt Lukken, acting chairman of the trading commission, warned that his agency's expertise "may be jeopardized with the creation of a larger regulatory bureaucracy."

While some regulators no doubt will be fearful of losing powers, those regulated had their own concerns.

"Dismantling the thrift charter and crippling state banking charters will weaken banking in America," said Edward Yingling, president of the American Bankers Association.

The proposal would create one super agency in charge of business conduct and consumer protection, performing many of the functions of the current Securities and Exchange Commission.

The plan also would ask Congress to establish a federal Mortgage Origination Commission to set recommended minimum licensing standards for mortgage brokers, many of whom now operate outside of federal regulation. And the plan would take a first step toward federal regulation of the insurance industry by asking Congress to establish an Office of Insurance Oversight inside the Treasury Department.

Paulson acknowledged that most of the changes will not occur until after a lengthy debate in Congress, leaving it to the next administration to deal with the biggest changes proposed by the report.

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