New US rules for credit markets

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US financial chiefs have put forward a series of new regulations to prevent a repeat of the continuing credit crunch and bad mortgage debt woes.

US Treasury Secretary Henry Paulson said the changes were aimed at restoring investor confidence.

Among the recommendations is a call for federal and state regulators to strengthen the oversight of the country's mortgage lenders.

Meanwhile, banks are being asked to give more details of debt they resell.

'No excuses'

The recommendations have been endorsed by Mr Paulson together with Federal Reserve Chairman Ben Bernanke, and Securities and Exchange Commission Chairman Christopher Cox.

Regulation needs to catch up with innovation and help restore investor confidence Henry Paulson

Formulated by a presidential working group following the revelation of the crisis in the US mortgage market last summer, they aim to boost transparency and risk management.

"This effort is not about finding excuses and scapegoats," said Mr Paulson.

"Regulation needs to catch up with innovation and help restore investor confidence but not go so far as to create new problems, make our markets less efficient or cut off credit to those who need it."

Other recommendations in the 20-page report include a call for credit rating agencies to improve their work.

The main credit agencies have been widely criticised for failing to spot the bad mortgage debt that sparked the wider credit crunch after it was resold both to other US banks and lenders around the world.

Mr Bernanke said the recommendations "constitute an appropriate and effective response to the deficiencies in our financial framework that contributed to the current turmoil in financial markets".