Mr. Paulson will say in a speech to be delivered today that the fall of Bear Stearns has expedited the need for the government to address the "outdated" regulatory oversight structure while not intervening too much in the functioning of markets.
"We must dramatically expand our attention to the fundamental needs of our system, and move much more quickly to update our regulatory structure always keeping in mind that there must be a balance between market discipline and market oversight," he will say according to prepared remarks.
Earlier this year, Treasury unveiled a blueprint for the future of financial-market regulation that gave greater authority to the central bank and envisioned it overseeing the stability of financial markets as a whole. Mr. Paulson's speech suggests he wants to tackle the role of the Fed more promptly. Implementing the entire blueprint could take years, if it happens at all, and would require congressional action.