FACTBOX: Treasury proposals for regulatory overhaul

(Reuters) - The following are major recommendations proposed by the Treasury Department to overhaul the regulation of the financial services industry including banks, securities, futures and insurance.

Treasury Secretary Henry Paulson is expected to unveil the proposals, which were published by the New York Times, on Monday.

*Short-term recommendations focus on acting now to improve regulatory coordination and oversight in the wake of recent turmoil in the credit and mortgage markets

*Intermediate recommendations focused on eliminating duplications in the U.S. regulatory system

*A conceptual model for an "optimal" regulatory framework focused on three objectives: market stability; safety and soundness with government backing, and business conduct

SHORT-TERM RECOMMENDATIONS

*President's Working Group should have better inter-agency coordination and communication to mitigate systemic risk to the financial system, enhance financial market integrity, promote consumer and investor protection, and support capital markets efficiency and competitiveness

*PWG should be expanded to include the heads of the Office of the Comptroller of the Currency (OCC), the Federal Deposit Insurance Corporation (FDIC), and the Office of Thrift Supervision (OTS)

*Creation of a new federal commission called the Mortgage Origination Commission (MOC). Its presidentially appointed director would chair a board comprising of the Federal Reserve, OCC, OTS, FDIC, National Credit Union Administration, and Conference of State Bank Supervisors

*MOC would set licensing standards for state mortgage market participants to address personal conduct, disciplinary history, educational requirements, and it would evaluate each state's system for licensing and regulation of participants in the mortgage origination process

*Fed would retain authority to draft regulations for national mortgage lending laws but enforcement authority for federal laws should be clarified and enhanced

*Appropriate conditions should be attached to temporary lending from Fed when market stability is threatened and Fed should have information through on-site examination or other means

*PWG should consider broader regulatory issues associated with providing discount window access to non-depository institutions

INTERMEDIATE-TERM RECOMMENDATIONS

*Phase out the federal thrift charter to the national bank charter and close the OTS whose operations would be assumed by the OCC over a two-year period

*Place state-chartered banks with federal deposit insurance under the Fed or the FDIC

*Establish an optional federal insurance charter while maintaining the current state-regulatory system

*Merge the Securities and Exchange Commission with the Commodity Futures Trading Commission

LONG-TERM OPTIMAL REGULATORY STRUCTURE

*Fed should have market stability regulation authority

*Establish a new prudential financial regulator for financial institutions that have any explicit government guarantees

*Establish a new business conduct regulator to monitor business practices and ensure consumers receive full disclosure on loans