Treasury Secretary Henry Paulson's plan for streamlining financial regulations is already meeting resistance. The plan basically calls for reducing the the seven current federal regulators into three agencies: the US Federal Reserve, a newly created financial regulator, and a third agency for consumer protection and business practices. He also recommends closing down the Office of Thrift Supervision and transferring its duties to the Office of the Comptroller of the Currency, which oversees national banks.In an effort to regulate the activities of mortgage brokers it is proposed to establish a ' mortgage origination commission' made up of regulatory agency representatives that would be able to set licensing standards for mortgage brokers.
However legislation is expected to be complex and is unlikely to be completed in an election year.Influential lawmakers have indicated that they need more time to study the proposals in detail. Consumer groups on their part are not sure whether the proposals are far reaching enough to be able to give them the protection they need. At the same time industry is already shouting that they go a bit too far.
The most scathing criticism of the plan came from Democratic Senator Christopher J Dodd of Connecticut who heads the Senate Banking Committee. He emphasized that the Paulson plan had nothing to help homeowners facing higher mortgage rates and foreclosures. It was helping such people which should be a priority at the moment, he said. The Democrats among other measures want local governments to be given $4 billion to purchase foreclosed properties, setting in effect a floor price for homes. Senator Dodd was also critical of the proposal to give more powers to the Fed , which he blames for the present crisis in the first place.
Paulson, an experienced Wall Street hand, on his part has clarified:' I am suggesting that we should and can have a structure that is.........more flexible, one that can better adapt to change, one that will allow us to more effectively deal with inevitable market disruptions, one that will better protect investors and consumers, and one that will enable US capital markets to remain the most competitive in the world.'