Regulatory reform not a response to crisis: US Treasury

US Treasury Secretary Henry Paulson said the recommendations for a sweeping overhaul of financial markets regulation was not intended as a response to the current market turmoil and should not be implemented until the present market difficulties had passed.

Secretary Paulson made his remarks as the Treasury's released its Blueprint for Financial Regulatory Reform. The proposals are an attempt to streamline and modernise the existing regulatory system, much of which was developed after the Great Depression.

‘Some may view these recommendations as a response to the circumstances of the day; yet, that is not how they are intended,’ he said.

The recommendations should not be implemented in the midst of stressful situations that would add a greater burden to a market already under strain, said Secretary Paulson.

He added: ‘Our first and most urgent priority is working through this capital market turmoil and housing downturn, and that will be our priority until this situation is resolved.’

Commenting on the financial market stress, he said the Feds highest priority was limiting the impact on the real economy: ‘We are focused on maintaining stable, orderly and liquid financial markets and ensuring that our banks continue to support the economy by making credit available to consumers and businesses.’

‘I have the greatest confidence in the resiliency, flexibility and strength of our economy and our capital markets,’ concluded Secretary Paulson.