Treasury Secretary Henry Paulson says the Federal Reserve should have more power to regulate Wall Street. He’s the first in the Bush administration to endorse such an idea, says The Wall Street Journal on A1.

In keeping with Rupert Murdoch’s known desires, the story must be one of the shortest articles to appear on the Journal’s front in decades. It goes three columns wide but is less than 450 words.

The paper refers to other stories inside, and goes further in depth on A6:

His salvo is the latest example of how the housing and financial crisis has shredded regulatory and corporate boundaries that for years directed the government’s role in financial markets. Policy makers around the world are reconsidering new powers for supervisors, reversing a trend toward easing restrictions on banks and financial markets.

The Financial Times reports on its front page that Paulson says the Fed’s meddling in investment-bank finances should be temporary and that “investment banks merit different regulatory treatment than commercial banks because they do not have taxpayer-insured deposits.”

Fed’s gain would be SEC’s loss?

Bloomberg says such an increase in Fed power would come at the extent of the hapless Securities and Exchange Commission. It quotes one guy, at least, who thinks this is a very big deal:

”This is tectonic,” said Ralph Ferrara, a former general counsel at the SEC, and now a partner at Dewey & LeBoeuf LLP in Washington. “We no longer want to have a balkanized response to a national crisis…”

The SEC will be so diminished that it ”will be given a nice view of the Potomac from whatever floor of the comprehensive financial services regulator they are given,” said Ferrara.

The New York Times doesn’t think it’s such big news for some reason:

The Treasury secretary did not break new ground in his remarks, which nevertheless reflected his and the Bush administration’s continuing concern with the struggling economy and a growing collective belief that federal regulators need to know more about the often-secretive world of Wall Street finance—a world Mr. Paulson knows well as a former chief executive of Goldman Sachs.

But the Los Angeles Times says it’s a “significant shift from the position the administration held before the current credit crisis.”

Senate scrutinizes Bear deal

The NYT says senators “signaled their unease on Wednesday with the Federal Reserve’s shotgun marriage of JPMorgan Chase and Bear Stearns, demanding detailed information by next week about how the $30 billion deal was reached.” The Senate Finance Committee, on what looks like a bipartisan basis, will launch an investigation.

RIP: home-equity loan

The NYT goes above the fold on A1 with a story saying home-equity loans are the next hotspot in the credit crisis. Lenders are already playing the heavy to ensure they get their money back, helping prevent homeowners from selling their houses short.

Americans owe a staggering $1.1 trillion on home equity loans—and banks are increasingly worried they may not get some of that money back.

To get it, many lenders are taking the extraordinary step of preventing some people from selling their homes or refinancing their mortgages unless they pay off all or part of their home equity loans first. In the past, when home prices were not falling, lenders did not resort to these measures.

The Times trots out the stat that says Americans on average own less than 50 percent of their homes for the first time, having binged on easy cash in recent years provided by lenders falling all over themselves to shovel it out the door. Now the banks that own the first mortgage are going head to head with banks that own the second mortgage. The paper says 5.7 percent of home-equity loans are delinquent, but that’s not up terribly much from 4.5 percent last year.

One thing the NYT doesn’t mention is how much the demise of the home-equity loan will hurt. The economy has been goosed for years by folks taking big bucks out of their homes and spending it on renovations, vacations, or whatever. That running economic stimulus package is pretty much gone now.

Enron redux?

Ryan Chittum is a former Wall Street Journal reporter, and deputy editor of The Audit, CJR's business section. If you see notable business journalism, give him a heads-up at rc2538@columbia.edu.