The US Treasury secretary is to announce sweeping changes to the regulatory framework governing banks and insurers after the ravages of the credit crunch later today.

Hank Paulson will set out the proposed reforms, which are being made in a bid to protect the financial markets from potential upheavals in the future, in Washington.

Investment banks and insurers answer to the US Treasury, the SEC, and the US Accounting Board but are also held to account by various state regulators. Their obligations to these state regulators are set to be dropped.

Paulson has said that the changes would help to galvanise the sector against market troubles, but could not prevent such occurences from happening.

It is thought that Paulson will propose two new agencies, one to scrutinise the way in which mortgage lenders sell home loans and the other to regulate insurers.

Further reading:

Statement of SEC Chairman Christopher Cox Regarding Blueprint for Financial Regulatory Reform