Paulson to make major announcement tomorrow

We've barely begun the new quarter and already there's major news on the US economic front. Tomorrow at 10am EDT, US Treasury Secretary Henry Paulson will "discuss issues relating to financial institutions and financial markets" according to the Treasury web site. The event will be webcast at www.treas.gov.

While details won't be released until tomorrow, analysts are already discussing the outline of Paulson's plan to restructure the banking and insurance regulatory agencies. Both the Times Online and BusinessWeek are calling the proposed changes "the biggest overhaul of the supervision of America's banks and insurers since the Great Depression."

The current system of oversight was the result of piecemeal additions of supervisory agencies and departments since the Civil War. The proposed system will consolidate much of the supervisory responsibilities in the Federal Reserve. Some agencies will be consolidated or possibly entirely scrapped and new ones may emerge.

The plan is generating a lot of controversy among economists and those involved in the regulatory agencies. Opinions are also developing along Democrat and Republican party lines. Most analysts agree that the plan is a long-range plan and that only a few, if any, of its recommendations could be implemented in 2008. Which parts of the plan are actually implemented may also be affected by the results of the presidential elections this fall.

Here's a link to the WSJ article.