WASHINGTON — Amid new signs of financial turmoil, the Bush administration Thursday raised the prospect of tighter regulation of U.S. financial markets. But it once again stopped short of the step its critics are demanding -- sweeping government intervention in the worsening economic crisis.
For weeks, it has been clear that the administration would have to offer new initiatives to offset fears that America's credit system could lock up. Around the world, financial markets have gyrated. The domestic economy has shown new signs of recession. And congressional leaders have pushed ahead with plans for decisive government action.
But the package of proposals unveiled with much fanfare by the Treasury Department on Thursday was in large measure a call for greater self-policing by the financial industry.
Treasury Secretary Henry M. Paulson Jr. portrayed the plan as part of a carefully calibrated push to bolster the system's sputtering regulatory apparatus enough to deal with rapidly changing and highly unstable financial and mortgage markets.
"Regulation needs to catch up with innovation and help restore investor confidence, but not go so far as to create new problems [or] make our markets less efficient," Paulson said at a Washington news conference.
The plan was widely greeted as too little, too late. Even its most specific element -- a call for states to license the brokers who sold millions of overpriced, undersecured mortgages that form the core of the larger crisis -- was met with doubt.
"I'm skeptical," said Bert Ely, a conservative and widely respected expert on financial regulation. What's needed is not licensing, Ely said, but a simple rule: "He who makes a loan keeps the risk."
Thursday's developments in Washington came amid mixed signals from the global economy. The dollar hit new lows on international markets, trading at less than 100 Japanese yen for the first time in 12 years and at $1.56 to the euro -- the lowest since the European currency was issued in 1999.
The greenback's decline drove gold futures briefly above $1,000 an ounce for the first time ever as investors sought shelter from the currency upheaval. Gold ended at $992.30, up $13.50.
Traders were also unnerved by an unexpected drop in retail sales and news that Carlyle Group's mortgage bond fund, Carlyle Capital Corp., had defaulted on about $16 billion in mortgage-related debt.
