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Secretary Henry Paulson announced that the Treasury will soon release a Blueprint for Regulatory Reform that proposes a financial regulatory framework. The “latest episode has highlighted that the world has changed as has the role of other non-bank financial institutions, and the interconnectedness among all financial institutions”, Paulson said speaking at Capital Markets Competitiveness Conference in Washington. “These changes require us all to think more broadly about the regulatory and supervisory framework that is consistent with the promotion and maintenance of financial stability.”
“The Federal Reserve should have the information about these institutions it deems necessary for making informed lending decisions”, he said and proposed that the Federal Reserve, the SEC, and the CFTC should consider whether a more formalized working agreement should be entered into to reflect these events.
“Very relevant to this issue is the fact that bank regulation, which applies to institutions with an explicit taxpayer-funded backstop, is fundamentally different from non-bank regulation, which applies to institutions that are not supported by federal deposit insurance. The President's Working Group on Financial Markets will evaluate these issues and their implications for regulation of bank and non-bank financial institutions. “