Treasury Wants Mega-Fed to Monitor Markets

Plan would merge agencies, allow Fed to swoop in on threats
By Neal Colgrass,  Newser Staff
Posted Mar 28, 2008 10:14 PM CDT
Treasury Wants Mega-Fed to Monitor Markets
President Bush poses for cameras at the conclusion of his meeting with the President's Working Group on Financial Markets, Monday, March 17, 2008, in the Roosevelt Room of the White House in Washington.   (AP Photo/Gerald Herbert)

The Treasury wants a newly empowered Federal Reserve to monitor market stability and swoop in on institutions that threaten it, the New York Times reports. If approved by lawmakers, the Treasury plan would merge a jumble of regulatory agencies and combine the SEC with the Commodity Futures Trading Commission. But the plan also reduces or maintains current regulation in many cases—elements sure to provoke battles with Democratic lawmakers.

“I am not suggesting that more regulation is the answer," Secretary of the Treasury Henry Paulson plans to say Monday. The plan would even reduce SEC oversight of stock exchanges and new products. But it would let the Fed oversee bookkeeping of financial institutions deemed a threat to the system. The Treasury will show its plan to Congress Monday, hoping it will guide a policy debate likely to drag on into next year. (Read more Federal Reserve stories.)

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