Henry Paulson's Really Bad Idea
Paulson To Urge New Fed Powers Bank Would Help Police Wall Street
By Neil Irwin Washington Post Staff Writer Thursday, June 19, 2008; D01
Treasury Secretary Henry M. Paulson Jr. plans to call today for the Federal Reserve to be given new, explicit powers to intervene in the workings of Wall Street firms to protect the financial system, adapting his vision of how the financial world should be regulated to reflect the lessons of the collapse of Bear Stearns.
"Our nation has come to expect the Federal Reserve to step in to avert events that pose unacceptable systemic risk," Paulson plans to say in a speech today, according to prepared remarks obtained by The Washington Post.
But the central bank "has neither the clear statutory authority nor the mandate to anticipate and deal with risks across our entire financial system."
"We should quickly consider how to appropriately give the Fed the authority to access necessary information from highly complex financial institutions and the responsi…