(CBS/AP) The Bush
administration Monday proposed the most far-ranging overhaul of the financial
regulatory system since the stock market crash of 1929 and the ensuing Great
Depression.

The plan would change how the government regulates thousands
of businesses from the biggest U.S. banks and investment houses down to the
local insurance agent and mortgage broker.

Treasury Secretary Henry
Paulson unveiled the 218-page plan in a speech in Treasury's ornate Cash Room.
He declared that a strong financial system was important not just for Wall
Street but also for working Americans.

The administration's plan was
already drawing criticism from Democrats that it does not go far enough to deal
with abuses in mortgage lending and securities trading that were exposed by the
current credit crisis.

The plan, which would require congressional
approval for its biggest changes, seeks to trim a hodge-podge collection of
overlapping jurisdictions that date back to the Civil War.

It would give
the Federal Reserve more power to protect the stability of the entire financial
system while merging day-to-day bank supervision into one agency, down from five
at present.

It also would create one super agency in charge of business
conduct and consumer protection, performing many of the functions of the current
Securities and Exchange Commission.

It would propose eliminating the
Office of Thrift Supervision and the Commodity Futures Trading Commission,
merging their functions into other agencies.

It would ask Congress to
establish a federal Mortgage Origination Commission to set recommended minimum
licensing standards for mortgage brokers, many of whom now operate outside of
federal regulation, and it would also take a first step toward federal
regulation of the insurance industry by asking Congress to establish an Office
of Insurance Oversight inside the Treasury Department.

Paulson
acknowledged in his remarks that most of the changes will not occur until after
a lengthy debate in Congress, leaving it to the next administration to deal with
the biggest changes proposed by the report. He also said the Bush
administration's focus would remain on getting through the current severe credit
crisis, which has roiled financial markets since last August.



Paulson rejected
Democratic charges that it was lax regulation of mortgage brokers and the
financial industry that had led to the current problems.

"I do not
believe it is fair or accurate to blame our regulatory structure for the current
market turmoil," he said. "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."


Banking groups raised strong objections to the plan while other industry
groups had mixed reactions.

"Dismantling the thrift charter and
crippling state banking charters will weaken banking in America," said Edward
Yingling, president of the American Bankers Association.

In Congress,
House Financial Services Committee Chairman Barney Frank, who is working on his
own regulatory revamp, called Paulson's proposal a "constructive step forward"
but said it wouldn't give the Federal Reserve enough authority to carry out its
expanded job to police the stability of the entire financial system.

"We
need to be clear what it won't do," CBS News correspondent Anthony Mason told The Early Show. "It could streamline the system, that's what
it's about. The markets will like this because as one economist said to me, this
is the 'go-easy on Wall Street plan.'"

Mason added, "There's not
a lot of new regulation here."

Many Democrats said that Congress' first
priority should be to deal with the current mortgage crisis that is threatening
millions of Americans with the loss of their homes and that an extensive debate
on a regulatory overhaul should not occur until a new president is in office
next year.

CBS News correspondent Kimberly Dozier reports this
plan may not be enough to satisfy lawmakers on Capitol Hill who have to sign off
on it - and many of them are already hard at work on their own proposals, which
would impose a lot more new regulation.

Senate Banking Committee
Chairman Christopher Dodd, a Connecticut Democrat, said in an appearance on
CBS News' The Early Show that it was not a failure of the
regulatory scheme but "a failure of leadership" that led to the current crisis.


"Last week the administration found $30 billion to help one
Wall
Street company. People are angry, because they don't see the same degree of
energy and concern for what's happening on Main Street," he said.

The
proposed overhaul would be the most extensive since the current regulatory
system was created in response to the 1929 stock market crash and the Great
Depression.

It comes at a time when the financial system faces its most
severe credit crisis in two decades, one that has resulted in billions of
dollars of losses for big banks and investment houses and the near-collapse of
Bear Stearns, America's fifth-largest investment bank.

The rising tide
of bad debt has made it harder for consumers and businesses to get credit,
further weighing on an economy struggling with a prolonged housing slump and
soaring energy prices. Many economists believe the U.S. is already in a
recession.

© MMVIII, CBS Interactive Inc. All Rights
Reserved. This material may not be published, broadcast, rewritten, or
redistributed. The Associated Press contributed to this report.