"The fact of the matter is that New York's current regulations are out of date," New York Governor Eliot Spitzer said in a statement. "By reforming burdensome and ineffective regulation, the commission's recommendations will help New York retain and enhance its status as the world's financial capital."

The statement distinguishes the commission's "principles-guided" system from a stricter principles-based approach, such as the framework that exists in the United Kingdom.

It explains that the principles would act as guidance for interpreting existing regulations and statutes, and would serve as "key objectives" in developing future regulation.

"I guarantee there are rules that we have that no one can tell you what the principle is behind them anymore," said Mr. Dinallo, who chairs the commission. "I've had that conversation. That's bad--we're not in a good place. So I think that the principles will help us decide which rules are important, which ones aren't important, and how to improve them."

Mr. Dinallo also addressed the perception that financial services companies may be able to take advantage of a principles-guided approach in ways that a rules-based approach would not allow.

"I think the consumer groups have a fair concern that principles-based regulation not be some code for light-touch, no regulation," he said.

"But I actually think that's why what [Scott Rothstein, the committee's executive director, has] come up with--which is principles-guided regulation--is really important, because it's not that we're going to replace all of the Insurance Law with the [principles]," he added.. "What we're going to do is have a set of principle regs as a reference point to how we interpret the rules, how to thin down the rules; which rules matter."

Other ideas discussed by the commission included:

o Eliminating out-of-date rules that are "unnecessarily burdensome."

o Instituting a risk-based approach to regulation.

o Having a single state regulator for all financial services.

On this last point, Gov. Spitzer's statement notes that various sectors of the financial services sector have historically fallen into separate silos. Currently, however, these sectors are offering similar products and so should not necessarily be treated differently.