TSY: Blueprint is “Keyed Off” Current Market Situation, But Not a Response To It
A Treasury official provided additional detail on the wide-ranging regulatory overhaul proposed by Secretary Hank Paulson earlier today. Treasury:
* Would give the FED “quite broad” licensing, enforcement, and rule-writing powers
* Says the Commodity Futures Trading Commission regulates “significantly more” financial futures trading than agricultural and other commodity futures, making its separation from the Securities and Exchange Commission out of step with the times
* Says the executive order to expand the President’s Working Group should happen soon. Next focus (after working through current market issues) is on starting SEC-CFTC merger and forming federal mortgage commission (MOC)
* Envisions FED oversight of credit default swaps in the long term
* Says hedge funds can pose a threat to stability, so should be more regulated, too
* Acknowledges Treasury “is not winning any popularity contests right now”
* Believes US financial market regulation should give equal standing to consumer protection (unlike UK’s FSA, which focuses more on wholesale markets)
* Says short-term objectives should be complete this year; intermediate objectives in 2-8 years