Paulson To Urge New Fed Powers / Bank Would Help Police Wall Street (WP)

Washington Post ^ | 6/19/08 | Neil Irwin

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Treasury Secretary Henry M. Paulson Jr. plans to call today for the Federal Reserve to be given new, explicit powers to intervene in the workings of Wall Street firms to protect the financial system, adapting his vision of how the financial world should be regulated to reflect the lessons of the collapse of Bear Stearns.

"Our nation has come to expect the Federal Reserve to step in to avert events that pose unacceptable systemic risk," Paulson plans to say in a speech today, according to prepared remarks obtained by The Washington Post. But the central bank "has neither the clear statutory authority nor the mandate to anticipate and deal with risks across our entire financial system."

"We should quickly consider how to appropriately give the Fed the authority to access necessary information from highly complex financial institutions and the responsibility to intervene in order to protect the system," Paulson plans to say, "so they can carry out the role our nation has come to expect."

Over the course of a few days in March, the central bank took unprecedented steps, with Paulson's support, to keep the rapid dissolution of Bear Stearns from causing an international financial catastrophe. The Fed provided financial backing for the acquisition of the investment bank by J.P. Morgan Chase and made emergency loans available to all major investment firms.

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Government is not the solution. Government is the problem.

- Ronald Reagan

[EagleUSA]

Nationalizing Wall Street???

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Libertarian ping! To be added or removed freepmail me or post a message here.

[kbennkc]

The government can not protect us from killer tomatoes , the financial market will correct itself if left alone .

[nicola_tesla]

They already have all the regulation they need, they just need to enforce the regulations.

[kcm.org]

Bear Sternes was too slow to jump upon the oil bubble to cover their subprime losses, so to the victors go the spoils!

[calex59]

Government is not the solution. Government is the problem.

- Ronald Reagan

Great comment, but I say it differently:

Get the frickin' Government out of our lives and keep it out. They can only hurt us, not help us.

May not be as elegant but I believe it gets the point across.

[rabscuttle385]

Nationalizing Wall Street???

That will increase systemic or market risk to 100 percent and, I assure you, the results will not be particularly pretty.

[djsherin]

They’re setting us up for a situation that NO amount of government intervention can fix and that wouldn’t exist if the market were able to operate by itself without regulation. This is insane. The notion that the government will be there to take care of all our needs is culturally and nationally suicidal!