Treasury Secretary Henry Paulson’s proposed plan to overhaul the financial system would include increasing the Fed’s powers. While saying that further regulation is not the answer, Paulson sent mixed signals by expanding the Federal Reserve’s powers to include regulating non-traditional banks – such as investment banks – and creating new bodies to regulate the mortgage industry. The timing of the new plan is interesting considering the Fed’s recent bailout of Bear Stearns – an investment bank. This bailout sent up a potentially troubling signal – large financial institutions have little disincentive to steer clear of risky investments, knowing that if they get into too much trouble, the government will be there to offer liquidity.
« Just Around the Corner | Main | Do You Know The Way? »
Sign up for live events!
Bookmark this page
Email Us