Paulson Financial Regulation Reform Plan Already Faces Discounting

The mortgage-backed securities crisis has resulted in turmoil in the global markets, but politics could get in the way of any quick fixes of the US financial system, reports Thomson Financial News. Three short-term recommendations in the proposal from Treasury Secretary Henry Paulson include expanding a presidential working group on the financial markets; establishing a federal commission to monitor mortgage brokers, regulation now conducted by states; and formalize information collection from investment banks. Parts of the plan have been in the works for more than a year, and include regulations designed to prevent loss of business to overseas markets with more flexible regulations. But most US politicians worry more about angry homeowners who fear losing their homes than about banks and investment firms seeking to expand business. Comprehensive reform will take time and the current US administration has less than a year remaining in office. Some analysts suggest that the proposal could be one way of making it appear that the administration is taking fast action on a crisis that has yet to run its course. – YaleGlobal