Mr Paulsen intends to make the Federal Reserve into a 'super-regulator' with greater powers to investigate banks and brokerages who may be taking on too great a financial risk.
This plan will replace the already disparate system of financial watchdogs of which Mr Paulsen described to the Wall Street Journal as "the plumbing hasn't changed to meet the realities".
In the plan the Prudential Financial Regulatory Agency would oversee insurance companies, and the Business Regulatory Agency would look after consumer interests.
Mr Paulsen, however, said that the blueprint would not be put into action until the present market turbulence had eased.
"But we've got a chance of getting people to look at it more broadly now. In that way, I think the timing is great," he said to the Wall Street Journal.
The plans have been criticised by existing watchdogs who believe this marks a power shift from individual states to Washington.