US Treasury plan shields Wall Street speculators

[Joanne98]

US Treasury Secretary Henry Paulson on Monday presented a broad plan to revamp the American financial regulatory system. The proposal, while giving the Federal Reserve Board expanded trouble-shooting powers over financial markets and institutions, would actually weaken federal oversight of Wall Street investment banks and leave virtually untouched the vast, unregulated secondary, or “derivatives,” markets.

Speaking barely two weeks after the Fed intervened to prevent the bankruptcy of the investment bank Bear Stearns and announced massive loans to other Wall Street firms to avert a meltdown of the financial system, Paulson’s “Blueprint for Financial Regulatory Reform” underscores the determination of the most powerful sections of the financial establishment to block any measures that would limit their ability to generate profits and multi-million-dollar compensation packages from various forms of financial speculation.

Paulson largely cast the proposal as a response to the bursting of the US housing bubble and the subprime mortgage crisis that have resulted in tens of billions of dollars in losses for major banks and a crisis of confidence in the entire US credit system. In fact, his department began drafting the plan last spring as a proposal to further deregulate the American financial system and make it even more profitable and more competitive against foreign rivals in Europe and elsewhere.

Paulson, a former Nixon aide and Wall Street executive, has long advocated further moves to limit government regulation of the banks and financial houses. He was the CEO of Goldman Sachs, the biggest US investment bank, before taking over as Bush’s treasury secretary in 2006, and personally benefited from the fast-and-loose risk-taking on Wall Street that was encouraged under both Republican and Democratic administrations. His compensation package, according to reports, was $37 million in 2005 and $16.4 million projected for 2006. His net worth has been estimated at over $700 million.

Not surprisingly,...
http://www.wsws.org/articles/2008/apr2008/paul-a01.shtml