Monday, September 15, 2008

Wall Street Turmoil Likely to Spur Regulatory Overhaul Next Year

Sept. 15, 2008 – 1:48 p.m.

The turmoil on Wall Street and its impact on the broader economy is likely to move regulatory changes higher on the agenda for the new Congress and the next president.

For the immediate future, Democrats seized on the crisis as another reason to press an economic stimulus package. But on a broader level, lawmakers will probably be reluctant to wade into the complex crisis in the remaining weeks of the current session.

They may, however, be compelled to act quickly on an array of financial market policies early next year.

Both major candidates for president issued statements Monday indicating they would try to drive the debate in that direction.

Sen. John McCain , R-Ariz., said, “major reform must be made in Washington and on Wall Street” to stabilize the situation.

“The McCain-Palin administration will replace the outdated and ineffective patchwork quilt of regulatory oversight in Washington and bring transparency and accountability to Wall Street,” McCain said. “We will rebuild confidence in our markets and restore our leadership in the financial world.”

Sen. Barack Obama , D-Ill., said: “The challenges facing our financial system today are more evidence that too many folks in Washington and on Wall Street weren’t minding the store. Eight years of policies that have shredded consumer protections, loosened oversight and regulation, and encouraged outsized bonuses to CEOs while ignoring middle-class Americans have brought us to the most serious financial crisis since the Great Depression.”

President Bush, meanwhile, said his administration was “working to reduce disruptions and minimize the impact of these financial market developments on the broader economy.”

Treasury Secretary Henry M. Paulson Jr. , speaking at the White House, said he was “committed to working with regulators here and aborad as well as policymakers in Congress to maintain stability of American financial markets”

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