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US looks to revamp financial firm rules

WASHINGTON -- The Bush administration plans to review the regulatory system for financial institutions, with the goal of making changes to better reflect modern markets.

Treasury Secretary Henry Paulson yesterday said the review will examine regulation of all companies that provide financial services. Recommendations will be released early next year, he said.

"To maintain our capital markets' leadership, we need a modern regulatory structure complemented by market leaders embracing best practices," Paulson said. "The steps we are announcing today will help to strengthen our global competitiveness."

Paulson did not spell out any proposed changes. Other officials said Treasury would look into consolidating overlapping functions. The Clinton administration considered merging the Office of the Comptroller of the Currency and the Office of Thrift Supervision.

Speaking to executives in New York City, Paulson said the focus would be to review how accounting practices, government regulations, and the legal environment affect financial companies' ability to do business.

"We are going to take about six months at Treasury and . . . develop a blueprint for modernizing the regulatory structure," Paulson told the conference, sponsored by The Wall Street Journal.

Paulson said he opposes legislation that would single out private-equity firms and hedge fund managers for a major tax increase.

"We must continue to reform the US financial services regulatory regime so that it helps facilitate global capital flows while protecting investors and preserving financial stability," said Marc Lackritz, president of Securities Industry and Financial Markets Association.

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