(Agencies)
Updated: 2008-03-31 22:20

es will not occur until after a lengthy debate in Congress, leaving it to the next administration to deal with the biggest changes proposed by the report. He also said the Bush administration's focus would remain on getting through the current severe credit crisis, which has roiled financial markets since last August.

President Bush's aides said Monday after the announcement that Bush was happy to let Paulson be the lead figure on this issue.

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"The president's point of view is that he trusts Secretary Paulson to put forward what he thinks is a constructive plan," White House press secretary Dana Perino told reporters traveling with Bush aboard Air Force One to Ukraine on Monday.

She said administration officials will work with lawmakers in hopes of having constructive conversations. Asked if Bush's goal is to get the overhaul approved before he leaves office, Perino said: "We'll have to see. It's a big attempt."

"Secretary Paulson has been working on this package for about a year, so it's not like pulling a rabbit out a hat," Perino added. "It's very constructive, deliberate thinking amongst the best minds in economics."

For his part, Paulson rejected Democratic charges that it was lax regulation of mortgage brokers and the financial industry that had led to the current problems.

"I do not believe it is fair or accurate to blame our regulatory structure for the current market turmoil," he said. "I am not suggesting that more regulation is the answer or even that more effective regulation can prevent the periods of financial market stress that seem to occur every five to 10 years."

Banking groups raised strong objections to the plan while other industry groups had mixed reactions.

"Dismantling the thrift charter and crippling state banking charters will weaken banking in America," said Edward Yingling, president of the American Bankers Association.

In Congress, House Financial Services Committee Chairman Barney Frank, who is working on his own regulatory revamp, called Paulson's proposal a "constructive step forward" but said it wouldn't give the Federal Reserve enough authority to carry out its expanded job to police the stability of the entire financial system.

Many Democrats said that Congress' first priority should be to deal with the current mortgage crisis that is threatening millions of Americans with the loss of their homes and that an extensive debate on a regulatory overhaul should not occur until a new president is in office next year.

Senate Banking Committee Chairman Christopher Dodd, D-Conn., said in an appearance on CBS' "Early Show" that it was not a failure of the regulatory scheme but "a failure of leadership" that led to the current crisis.

The proposed overhaul would be the most extensive since the current regulatory system was created in response to the 1929 stock market crash and the Great Depression.

It comes at a time when the financial system faces its most severe credit crisis in two decades, one that has resulted in billions of dollars of losses for big banks and investment houses and the near-collapse of Bear Stearns, the country's fifth-largest investment bank.

The rising tide of bad debt has made it harder for consumers and businesses to get credit, further weighing on an economy struggling with a prolonged housing slump and soaring energy prices. Many economists believe the country is already in a recession.

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