Plan Aims to Restore Faith in the Economy

"Unfortunately, you've got the brightest minds of both parties working night and day to come up with solutions, and so far there have been a lot more misses than hits," he said.

The report was prepared by the government's most powerful regulators, including Paulson, who chairs the group; Federal Reserve Chairman Ben S. Bernanke; and Securities and Exchange Commission Chairman Christopher Cox. Before Paulson took office, the group, established by President Ronald Reagan, had hardly met.

After starting work seven months ago, those policymakers and the heads of several other federal agencies held two long meetings to craft a framework for their proposals, while top staff members regularly cloistered to hammer out the details. Paulson and Bernanke, in particular, worked closely together, spending half the day on a Saturday in early March to shape the final recommendations.

The high-level, interagency nature of the committee made it difficult for special interests to influence the group, though Paulson said he kept in contact with the private sector.

"It's not a group that's lobbied," said Edward L. Yingling, president of the American Bankers Association. "It meets very quietly on its own."

Because few outsiders participated in drafting the recommendations, the group has "a lot of work to do" to persuade private firms to agree to new policies, Paulson said. "When all of the regulators come together and speak with one voice, that's very powerful."

But if businesses such as credit-rating firms and mortgage brokers prove to be resistant to persuasion, Paulson warned, "We obviously will take the next steps . . . and if we need additional authorities, we'll go get them."

Leading credit-rating firms Moody's and Fitch Ratings did not comment on the recommendations, saying they would work with the group and appreciated its efforts.

The National Association of Mortgage Brokers was less receptive. "Regrettably, we were not asked to provide input into the recommendations," said Executive Vice President Roy DeLoach. "We believe it is a flawed plan to ask regulators of state lenders and mortgage brokers for greater oversight without including all lenders."

Paulson, a former chief executive of Goldman Sachs, also raised the hackles of some Wall Street bankers by suggesting they cut dividends to shareholders to raise their capital levels to cover potential losses. They said punishing shareholders was the wrong move for banks that are struggling.

Staff writers Tomoeh Murakami Tse in New York and Neil Irwin contributed to this report.