JURIST - Paper Chase: Proposed US financial regulatory overhaul would merge SEC, CFTC

[JURIST] US Treasury Secretary Henry M. Paulson, Jr. [official profile] unveiled a plan [factsheet, PDF] to overhaul the nation's financial regulatory system and merge key federal administrative agencies in remarks at a press conference [transcript] in Washington Monday. The executive summary [text] of the Treasury's Blueprint for a Modernized Financial Regulatory Structure [PDF text] described the initiative as presenting

a series of "short-term" and "intermediate-term" recommendations that could immediately improve and reform the U.S. regulatory structure. The short-term recommendations focus on taking action now to improve regulatory coordination and oversight in the wake of recent events in the credit and mortgage markets. The intermediate recommendations focus on eliminating some of the duplication of the U.S. regulatory system, but more importantly try to modernize the regulatory structure applicable to certain sectors in the financial services industry (banking, insurance, securities, and futures) within the current framework.

If enacted in full, the Treasury's suggested changes would be the most comprehensive overhaul of financial regulatory systems since the current system was devised in the wake of the Great Depression.

Among other things, the Blueprint contemplates the eventual merger of the Securities and Exchange Commission (SEC) with the Commodity Futures Trading Commission (CFTC) [official websites]. CFTC Chairman Walt Lukken adopted a cautious attitude towards that recommendation Monday, saying in a statement [text] that "The CFTC is a world-class regulator because of its focused mission, market expertise, manageable size, problem solving culture and global outlook—all of which may be jeopardized with the creation of a larger regulatory bureaucracy." SEC chair Christopher Cox, however, welcomed [statement text] the Treasury approach, suggesting that "recent events have provided further evidence, if more were needed, that financial services regulation in the United States needs to be better integrated among fewer agencies, with clearer lines of responsibility."

The US Chamber of Commerce supports comprehensive reform [press release] of the financial regulatory scheme; Christopher Dodd (D-CT), chairman of the Senate Banking Committee Chairman, was quoted by AP as that the overhaul would not cure the ongoing housing-credit crunch. AP has more.

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