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Paulson's plan too long-term for some in Congress

Reception to reform is warm on the Hill, but lawmakers seek more urgent action.

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Rep. Spencer Bachus, the ranking Republican on the panel, commended the Bush administration for producing a "far-reaching" blueprint, but added that some reforms will require "additional study and careful consideration."

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Congress's last overhaul of financial regulation took eight years. Many other overhauls gathered more dust than votes, says Kenneth Thomas, a finance expert at the University of Pennsylvania's Wharton School. "These things always look good on paper, but we have to overlay the political feasibility of all this. Oftentimes it doesn't happen," he says. "There's so much regulatory turf to be protected" that the results may not match the initial vision.

Some ideas will encounter resistance, such as merging the Securities and Exchange Commission and the Commodity Futures Trading Commission and federal involvement in regulating the insurance industry, says Carl Tobias, a law professor at the University of Richmond in Virginia. "States will ... [argue] that they are closer to the people and can be more effective than a federal bureaucracy."

In the short term, Democrats aim to move bills to give prompt relief to homeowners facing foreclosure. Senate majority leader Harry Reid plans on Tuesday to reintroduce a housing package that provides $4 billion for cities to buy foreclosed properties. The measure failed Feb. 28 by a vote of 48 to 46, but Democrats say the deepening housing crisis could change some GOP votes.

"There's clearly a sense now that the hands-off approach to financial markets has not worked," says Julian Zelizer, a congressional historian at Princeton University. "There's pressure from working-class Americans to do more [and] that's translating into momentum."

Staff writer Mark Trumbull contributed to this report.