Paulson's "Blueprint for Regulatory Reform" calls for, among many other things, the merger of the SEC, which regulates stock exchanges, securities and investment banks, and the CFTC-the federal agency with oversight responsibility for commodity bourses and the daily trading of more than $4 trillion in products ranging from cocoa to currencies.

The two agencies have spent decades skirmishing on the fringes of the financial markets, occasionally reaching accords to divvy up the regulatory landscape. Back in the '80s, for example, regulation of stock index futures was formally ceded to CFTC while SEC retained oversight over the cash market and nonfutures-settled options.

Since then, the two agencies have found themselves eyeing each other warily as they've assumed a sometimes-klutzy dual regulatory role with respect to products such as single-stock futures, TRAKRs and publicly traded commodity pools.

It's a paradigm that the Treasury secretary would like to put down for the last time. Paulson's report claims that "regulatory bifurcation" has made separate-and-unequal oversight of the futures and securities markets "untenable, potentially harmful and inefficient."

What makes the present regulatory scheme unequal? Most notably the CFTC's "principles-based" approach versus the strict rules-based dictum of the SEC. Oddly, while the Paulson reports calls for the SEC to be the survivor in the proposed merger, the senior agency is encouraged to adopt the more flexible regulatory stance of the junior bureau.

Not surprisingly, industry insiders are lining up on either side of the merger idea to squawk and crow about its virtues or vileness. I'll let you guess what the CFTC commissioners think about it. No, wait. CFTC Commissioner Bart Chilton won't have you second-guessing his notions. He wasted no time in publishing his views, advocating a go-slow (read "pound sand") approach.

"Merging prior to reaching consensus on agency functions, critical processes and the appropriate regulatory approach would be premature, ill-advised and potentially result in an unmitigated disaster," says Chilton.

Chilton's point of view is echoed by the biggest of the commodity exchanges, the Chicago Mercantile Exchange. Exchange officials hurled back a charge that the Paulson plan would produce an "overly homogenized, less effective and less competitive model" of regulation. Then, the CME got personal, claiming Paulson's notion of harmonizing futures and stock regulations speaks to the Treasury's lack of "sufficient understanding" of the two markets' distinctions.

Paulson's got quite a sales job ahead of him. In fact, with the commodity exchanges and the CFTC arrayed against him, at least one car on his proposed regulatory reform train seems likely to be pushed to a siding, at least for awhile.