New Powers for the Government

"The Treasury secretary on Monday formally unveiled his Blueprint for a Modernized Financial Regulatory Structure. The plan, which had been in the works for almost a year, envisions an expanded role for the Federal Reserve in preserving market stability and overseeing the financial services industry. Defining those responsibilities has taken on new urgency in the wake of a credit crunch that has led to some $200 billion in writedowns by big firms and now threatens to exact a toll on the economy."

"Skeptics contend that under former chief Alan Greenspan, the Fed played two roles in inflating the housing bubble that has since burst with such serious consequences for the financial sector. It's well accepted that Greenspan helped to fuel the housing bubble by cutting interest rates as low as 1% back in 2003, and keeping them there even as the economy began to recover." Fed up with the Fed by Colin Barr 3.31.08 [http://money.cnn.com/2008/03/31/news/fed-backlash.fortune/?postversion=2008033113]

The Treasury Department is backing a plan to give the Federal Reserve more regulatory power but it is the Fed who put gave us this mortgage crisis in the first place.

The three things that created the mortgage crisis according to investor Bill Fleckstein:

1. Easy money; low interest rates; easy credit
2. Changes in capital gains tax
3. Decrease regulation which made the originator of the loans able to hide the risk of their loans.

The Paulson plan would:
-designate the Fed as the primary regulator for market stability, greatly expanding its ability to examine any financial institution deemed to pose a risk to the stability of the system.
—shift the functions of the Office of Thrift Supervision to the Office of the Comptroller of the Currency, although ultimately the plan envisions just one banking regulator.
—merge the Securities and Exchange Commission with the Commodity Futures Trading Commission.
—create a national regulator for insurance companies, which now are largely regulated by the states.
—establish a commission to address the abuses exposed in the current tidal wave of mortgage defaults.

My opinion on this; I worry about the expanding power. What consequence will it bring about? I don't think we need more regulation we just need a solid gold standard. Let people loose money so they will be more careful about these risky loans.