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.