It didn't take long for critics to start throwing eggs at Treasury Secretary Henry Paulson's plan for overhauling the structure of the government's financial regulatory agencies.

Paulson released the blueprint on Monday (see Treasury Plans Financial Regulatory Overhaul) and it was quickly pronounced dead on arrival. That's not surprising considering that the plan, a sweeping reorganization of agencies like the Federal Reserve, the Securities and Exchange Commission, the Federal Deposit Insurance Corp., and the Commodity Futures Trading Commission, not to mention the elimination of the Office of Thrift Supervision, is being proposed by an administration that has less than a year to go in office.

To be sure, the blueprint includes both short- and long-term objectives, and Secretary Paulson doesn't recommend that its provisions all be adopted this year anyway. He is realistic enough to recognize that most of the proposals are not likely to sail through in a Congress dominated by the opposition party during an election year.

However, there are some parts of the blueprint that may survive the shredder. Both Congress and the Bush administration recognize the need to act this year while the country is still in the throes of an economic downturn that already appears to many Americans to be a recession.

One of the short-term goals of the plan is to establish a commission to set minimum standards for mortgage brokers, and it is likely that there will be more regulation on that front if not a separate commission. But ideas such as merging the SEC with its traditional rival, the CFTC, are probably not likely to fly, and there are already grumblings about the possibility of the SEC ceding some of its authority over accounting practices to the Federal Reserve, which has been blamed for failing to do a good job of policing the mortgage-lending practices of the big banks.

However, the blueprint has attracted support in some quarters from industry groups such as the Center for Audit Quality, the Securities Industry and Financial Markets Association, the Business Roundtable and the Managed Funds Association. Accountants have a stake in any reorganization that goes forward. With the presidential candidates already weighing in on some of the changes they would like to see in the financial regulators, it's likely that in the months ahead there will be more than one blueprint competing for attention.

Register or login for access to this item and much more

All Accounting Today content is archived after seven days.

Community members receive:
  • All recent and archived articles
  • Conference offers and updates
  • A full menu of enewsletter options
  • Web seminars, white papers, ebooks

Don't have an account? Register for Free Unlimited Access