The US Treasury has unveiled its blueprint for the biggest overhaul of financial regulation since the 1929 stock market crash.
US Treasury secretary Henry Paulson says the plan will give the Federal Reserve more powers to protect the stability of the entire US financial system.
Under the proposals, the Fed would have powers to examine the books of any financial institution deemed to potentially threaten the stability of the US financial system.
Paulson says the reforms address complex long term issues and are not a direct response to the current market turmoil.
The report, entitled Blueprint for a Modernised Financial Regulatory Structure, was commissioned two months before credit markets seized up last August.
Paulson stressed that more rules are “not the answer.”
He says: “We should and can have a structure that is designed for the world we live in, one that is more flexible, one that can better adapt to change, one that will allow us to more effectively deal with inevitable market disruptions and one that will better protect investors and consumers.”