Bush Administration Begins Review of Financial Market Regulations

The Bush administration will review the regulations governing the operation of America's financial markets to make sure that they don't harm this country's ability to compete in the global economy, Treasury Secretary Henry Paulson said Monday.

In his first major speech addressing market regulation, Paulson said the administration will convene a conference on capital markets and economic competitiveness early next year.

"Our capital markets remain strong and competitive, but they face some significant challenges that do not lend themselves to easy answers or quick fixes," he said in a speech to the Economic Club of New York.

Paulson said he did not believe new legislation was needed to change the Sarbanes-Oxley Act, but he said changes were needed in the enforcement of that law, which was passed in response to a wave of corporate accounting scandals.

"We need to implement the law in ways that better balance the benefits of the legislation with the very significant costs that it imposes, especially on small business," Paulson said.

The secretary said that what the administration would seek to ensure is a proper balance between protecting investors and not stifling innovation in financial markets. He said U.S. regulators needed to be mindful of the growing competition from around the world including such expanding financial markets as London and Hong Kong.

"We should not engage in a regulatory race to the bottom, seeking to eliminate necessary safeguards for investors in a quest to reduce costs," he said.

"The right regulatory balance should marry high standards of integrity and accountability with a strong foundation for innovation, growth and competitiveness," said Paulson, who was the head of investment giant Goldman Sachs before joining the Bush Cabinet in July.