March 31 (Bloomberg) -- Treasury Secretary Henry Paulson proposed the broadest overhaul of U.S. financial regulation since the Great Depression, saying American capitalism needs to be better prepared for ``inevitable market disruptions.''
``Our current regulatory regime is almost solely focused above ground at the tree level,'' Paulson said in remarks at the Treasury in Washington. ``The real threat to market stability is below ground, at the root level where the health of financial firms is intertwined.''
Paulson's 218-page ``Blueprint for Regulatory Reform,'' commissioned two months before credit markets seized up in August, said more rules aren't the answer to the current period of turmoil. The former chairman of Goldman Sachs Group Inc. said the system of regulating banks, securities firms and insurance companies is outmoded, and the Federal Reserve should expand its oversight of financial services beyond banks.
