G7 announces finance plan: regulations need ÔÇ£dramatic overhaulÔÇØ

After a weekend of meetings in Washington and Paris, finance ministers from leading industrialized nations have pledged to work together to tackle the financial crisis.   ┬á The G7 nations (the US, Japan, Britain, Germany, France, Italy and Canada) issued a five-point plan of "decisive action" to unfreeze credit markets, after their first meeting in Washington Saturday. ┬á┬á The plan is intended to protect major banks and financial institutions from failure and ensure they can raise capital from public and private sources. It includes steps to unfreeze the flow of credit and protect savers, although it did not reveal any specific measures. ┬á┬á Widespread fears of a global recession caused stock markets in the US, Europe and Asia to take a nosedive Friday despite a coordinated round of interest rate cuts in leading economies and cash injections by central banks. Wall Street has lost a fifth of its value in the past 10 trading days.┬á┬á Following a model introduced in the UK, the United States has also agreed to invest directly in banks for the first time since the Great Depression in the 1930s. ┬á┬á The International Monetary Fund (IMF) also held talks in the US capital over the weekend, which were also attended by President Bush. Leaders of the eurozone countries (the 15 European nations that use the euro as their currency) met in Paris Sunday. The UK, which has not signed up to the euro, was also present at that meeting.┬á┬á Once the crisis is over, however, international leaders must turn their attention to devising financial controls to prevent a reoccurrence. ┬á┬á Harvey Pitt, chairman of the Securities and Exchange Commission (SEC) from 2001 to 2003, believes that banking regulations need a ÔÇ£dramatic overhaulÔÇØ. ┬á┬á "We've got a 21st century financial services marketplace and a 19th century regulatory model," he told the BBC in an interview. "I think we need either an over-arching regulatory body that combines all of the important functions now, or closer and better co-ordination between them." ┬á┬á Earlier this year, US Treasury Secretary Henry Paulson acknowledged the government needs to change the regulatory system.  ┬á┬á┬á *┬á┬á┬á┬á┬á┬á┬á┬á┬á *┬á┬á┬á┬á┬á┬á┬á┬á┬á *  ┬á