Paulson Seeks Examination of Rules Governing Big Financial Players

WASHINGTON -- Treasury Secretary Henry Paulson called Wednesday for "some type" of additional oversight of investment banks by the Federal Reserve in connection with the recent decision to give them access to the central bank's credit.

The Fed's move earlier this month to start providing liquidity to primary dealers for the first time since the 1930s "deserves praise," said Mr. Paulson in prepared remarks for a speech to the U.S. Chamber of Commerce. But it also raises regulatory issues, since the Fed only regulates depository institutions, he said.

"Certainly any regular access to the discount window should involve some type of regulation and supervision," said Mr. Paulson.

Thus, he suggests two measures to improve Fed oversight of investment banks, including greater access to information and public disclosure.

The Fed should have access to the information it needs to make lending decisions, said Mr. Paulson. The central bank should continue to work with the Securities and Exchange Commission and Commodity Futures Trading Commission, he said, and consider whether more formal cooperation is needed.