United States Federal Reserve Building is seen from the air over Washington, D.C. (File)

The Bush administration is proposing a sweeping overhaul of the way the U.S. financial industry is regulated, giving broad new powers to the Federal Reserve - the U.S. Central Bank - to ensure market stability.

Treasury Secretary Henry Paulson will formally unveil the proposal on Monday.

The plan gives the Federal Reserve the power to examine the books of financial institutions that are deemed a threat to the country's overall economic stability.

The proposal also gives the Federal Reserve the power to require financial institutions to take corrective action to decrease or avoid risk.

The proposal also consolidates some of the government's regulatory agencies, which experts say failed to prevent the current subprime mortgage meltdown and credit crisis.

The new rules must be approved by Congress.

During his weekly radio address Saturday, President Bush expressed confidence an economic stimulus package will help energize the slowing economy, but Democrats say more help is needed.

Mr. Bush said incentives for businesses to invest in new equipment and individual tax rebates will give the economy a boost.

In the Democrats' weekly radio address, Illinois Congressman Bill Foster said more tax relief is needed for middle class families.

Foster said Democrats are working on a more comprehensive plan to help families avoid foreclosure and give cities a chance rehabilitate foreclosed home.

Some information for this report was provided by AFP, AP and Reuters.