U.S. Treasury Secretary Henry Paulson formally released his blueprint to overhaul the way Wall Street is regulated -- the first major regulatory revisions since the Great Depression.

"This wasn't a failure of regulatory practices. This was a failure of leadership," Dodd said on CBS' "Early Show." "The Congress gave the Federal Reserve Bank in 1994 massive regulatory authority; they just never exercised it at all."

Suggesting a failed regulatory process led to the current downturn "is to really miss the point entirely," Dodd said.

Among the changes the 200-plus-page blueprint would be a new mortgage commission, consolidation of agencies power and giving the Federal Reserve greater oversight of investment banks and financial institutions previously unregulated, Paulson said. The changes were meant for the long haul, not to respond to the immediate crisis.

As appealing as financial regulatory reform is, "what we need to do immediately is to deal with the foreclosure crisis," said Dodd, chairman of the Senate Committee on Banking, Housing and Urban Affairs. "We have as many as 2 1/2 million people losing their homes."