Treasury Secretary Henry Paulson announced today a sweeping plan to restructure the hodgepodge of federal agencies and regulators who oversee the nation's financial networks.
But don't expect to see any changes soon — or any relief out of this plan for Americans struggling to pay their bills.
Paulson's plan is not aimed at fixing the current economic crisis, but at preventing future meltdowns in the market.
The proposal would give the Federal Reserve more power at the expense of several other agencies, most notably the Securities and Exchange Commission. Other agencies would be folded into other existing or new agencies.
And with presidential and congressional elections just a few months away, it is highly doubtful that any changes outlined here will be implemented before the Bush administration leaves Washington.
"These long-term ideas require thoughtful discussion and will not be resolved this month or even this year," Paulson said.
Stocks on Wall Street saw modest gains today as a dismal first quarter finally came to a close. Investors for the most part were unmoved by Paulson's speech this morning and the release of his 218-page plan. Details of the treasury secretary's plan have been available for days.
Also moving the market today was a better than expected report on regional manufacturing. Overall volume on Wall Street was very low today.
The Dow Jones Industrial Average closed up about 49 points and the NASAQ saw a gain of nearly 18 points.
Paulson's so-called restructuring blueprint has been in the works for nearly a year. Paulson, the former CEO of Wall Street investment bank Goldman Sachs, has long called for a more efficient system for oversight, saying that the current regulatory structure was not built to address the modern financial system.
"Much of our current regulatory system was developed after the Great Depression and it has developed through reaction," said Paulson, who started crafting the plan last March.
"When we announced that we would work on such a Blueprint, other than some enthusiastic academics, few noticed," he added. "Today, of course, capital markets and financial regulation are on everyone's mind."
Paulson acknowledged that this overhaul is not and should not be the top priority of lawmakers in Washington. He says the administration will not seek to implement the regulatory changes until Washington comes up with a solution for the economic crisis that appears on the edge of — if not already in — a recession.
"Our first and most urgent priority is working through this capital market turmoil and housing downturn, and that will be our priority until this situation is resolved," Paulson said. "With a few exceptions, the recommendations in this blueprint should not and will not be implemented until after the present market difficulties are past."
The Federal Reserve today is chartered with overseeing the banking industry. Under Paulson's plan, the Fed would be a "marker stability regulator" and would be able to look at the books of any financial institution — including Wall Street investment banks — that might pose a threat to the stability of the financial markets.