Flaherty says Paulson plan a big part of G7 agenda

Wed Apr 2, 2008 12:48pm EDT
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OTTAWA (Reuters) - A U.S. proposal to overhaul financial regulation will be "a major topic of discussion" when finance ministers from the Group of Seven nations meet in Washington next week, Canada said on Wednesday.

Under the plan, Treasury Secretary Henry Paulson wants to give the Federal Reserve more authority over Wall Street and crack down on mortgage brokers.

"I expect that this will be a major topic of discussion -- in fact, I know it's going to be a major topic of discussion -- next week when we're in Washington," Canadian Finance Minister Jim Flaherty told reporters.

He also said he would be leading a discussion on finance institutional reform at the G7 meeting, but gave no details.

Paulson's plan is designed to tackle the aftermath of the U.S. subprime crisis that Ottawa says will cut Canadian growth this year.

"As we anticipated, there's some slowness. Canada is not an island," said Flaherty.

Asked whether Canada was in a relatively good position, he replied: "Yes, relative to the United States, we have not experienced the shock in the housing sector that the United States has experienced and is experiencing."

Flaherty said the United States and others were still working to deal with the fallout from a credit crisis sparked by the subprime problems.

"One of the realities is that we are working through the credit crunch internationally, that it is not over," he said.

(Reporting by David Ljunggren; editing by Janet Guttsman)

<p>U.S. Treasury Secretary Henry Paulson speaks at the Treasury Department in Washington March 31, 2008. REUTERS/Jason Reed</p>