Treasury Secretary Henry Paulson revealed sweeping plans for streamlining a hodgepodge of financial regulations that are blamed for allowing the US mortgage crisis to balloon into a full-blown economic threat.
The proposals, in the form of a 218-page "blueprint" that was started before markets unravelled in August, offer no quick fix for the credit contraction that threatens to tip the US economy into recession.
Under the proposals, the current patchwork of as many as seven federal regulators would be consolidated under three agencies: The US Federal Reserve, a newly created financial regulator, and a third agency for consumer protection and business practices.
Mr Paulson acknowledged that most of the proposals would not be enacted until after the current troubles have passed, perhaps long after President George W. Bush leaves office in January.
The regulatory blueprint proposes eventually vesting new powers in the Federal Reserve as a "market stability regulator" - effectively formalising a role the central bank adopted recently by expanding the list of financial firms that can borrow directly.
It would give the Fed authority to demand that all financial system participants supply it with full information on their activities and grant the Fed a right to collaborate with other regulators in setting rules for their behaviour.
The Bush administration has faced political pressure from critics who blame lax regulatory oversight for the mortgage mess. Mr Paulson, a 30-year Wall Street veteran, stressed that regulation must be light enough to keep markets innovative, and said those who tried to label the blueprint as advocating more or less regulation were "oversimplifying."
"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," he said.
"I am suggesting that we should and can have a structure that is... more flexible, one that can better adapt to change, one that will allow us to more effectively deal with inevitable market disruptions, one that will better protect investors and consumers, and one that will enable US capital markets to remain the most competitive in the world," he said.
In a nod to the likely turf battles to come, a Treasury official said the department was "trying not to let the political challenges shape how we see things."
Walt Lukken, acting chairman of the Commodity Futures Trading Commission, which under Treasury's plan would be merged with the Securities and Exchange Commission, said the CFTC had specialised expertise that could be "jeopardised" in a larger regulatory agency.
Sen. Christopher Dodd, the Connecticut Democrat and chairman of the influential Senate Banking Committee, said the plan did not address the root problems of the financial turmoil - namely souring subprime mortgages and rising foreclosures..
On Wall Street, investors concluded that it would be some time before any substantive changes were made.