WASHINGTON (AFP) - The collapse of investment giant Bear Stearns highlights the need to "think more broadly" about regulation of securities firms in the US, Treasury Secretary Henry Paulson said.
Paulson, speaking at the US Chamber of Commerce on the state of financial and housing markets, said his office is working on a "blueprint for regulatory reform" in an effort to avert further market turmoil.
The move by the Fed to open its lending to securities firms on the same terms as regulated banks was appropriate, Paulson said, but only as an emergency measure.
"Despite the fundamental changes in our financial system, it would be premature to jump to the conclusion that all broker-dealers or other potentially important financial firms in our system today should have permanent access to the Fed's liquidity facility. Recent market conditions are an exception from the norm."
The Treasury has been working on a major reform plan for financial markets and had been expected to release it by the end of this month.
It is no longer clear that will happen because of the fear of further upsetting the financial markets.
Treasury's planning was principally focused on untangling the web of financial regulatory agencies woven since the 1930s in the US. The market meltdown may now make much of the planning look outdated or risky.
RLCC Comment: Does the right hand know what the left hand is up to? Do you think this is in earnest?
It's about election politics.
, obtained via: , March 26, 2008, 8:40am