Paulson Wants Closer Tabs on Investment Banks

More transparency needed if they're to borrow from Fed, Treasury chief says
By Sam Gale Rosen,  Newser Staff
Posted Mar 26, 2008 2:25 PM CDT
Treasury Secretary Henry Paulson pauses while making remarks at the second annual Capital Markets Summit, Wednesday, March 26, 2008, in Washington.    (AP Photo/Lawrence Jackson)
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(Newser) – Treasury Secretary Henry Paulson said today that investment banks owe the government more information about their financial condition if they are occasionally allowed to borrow money from the Federal Reserve, the New York Times reports. Paulson seemed to call for tighter regulations before calling the recent bailout of Bear Stearns "precedent only for unusual periods of turmoil."

Paulson wasn't specific in addressing regulatory differences in the treatment of commercial banks—which are able to borrow from the Fed under the "discount window—and investment firms, only recently given that option. He also alluded to greater cooperation among federal agencies in keeping tabs on investment banks' transactions—and in keeping those transactions transparent.