After the near collapse of investment banks like Bear Stearns, Wall Street is awaiting an overhaul of its regulatory system. The re-regulation was announced by Treasury Secretary Henry Paulson last week, reports the Associated Press.
Essentially, the plan will consolidate power into the Federal Reserve, giving the financial institution more oversight into the wheelings and dealings on the Street. According to the proposal, it will give the central bank the power to look into the books of investment banks.
Peter Morici, a business professor at the University of Maryland and former chief economist of the U.S. Trade Commission told the AP, "This is a good start for the basis of discussion,"
He added, "But, this is bank reform written by an investment banker. … There’s nothing so far to improve the conduct of business on Wall Street to avoid another crisis."
However, some analysts are skeptical if the Paulson plan will rescue investment banks.
Richard X. Bove, a bank analyst at Punk Ziegler & Co. was quoted as saying in an AP report,"The financial industry blew it, did not exercise any restraint, and now the financial system is at risk," Adding, "It is evident that there must be some kind of re-regulation."