Housing-credit woes spur calls for more federal regulation

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http://news.yahoo.com/s/ap/20080419/ap_on_bi_ge/rush_to_regulation

A heavier federal hand is reaching into American life as politicians in both parties demand an overhaul of government financial regulation and more protection for homeowners in the face of mortgage woes and a weakening economy.

This rush to regulate also was apparent in the recent crackdown on the airlines, resulting in thousands of grounded flights for safety inspections as the government beefs up its enforcement of existing laws. There have been mounting proposals for tougher government rules to address climate change. High corporate salaries have come under attack on Capitol Hill, as have oil industry profits and rising food costs.

Advocates of more aggressive government action see it as a boon to ordinary Americans struggling in hard economic times. But those favoring a lighter federal touch worry that the pendulum will swing too far toward regulation, stifling economic growth and efficiency.

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Allen Sinai, chief global economist for Decision Economics, said the calls for more regulation are a response to anger on the part of ordinary Americans at seeing the value of their homes decline and, in many cases being faced with foreclosure and an inability to refinance, while a big investment bank like Bear Stearns can be helped by the government.