Ex-SEC Official Blames Agency for Blow-Up of Broker-Dealers

Ex-SEC Official Blames Agency for Blow-Up of Broker-Dealers

www.nysun.com

The Securities and Exchange Commission can blame itself for the current crisis. That is the allegation being made by a former SEC official, Lee Pickard, who says a rule change in 2004 led to the failure of Lehman Brothers, Bear Stearns, and Merrill Lynch.

The SEC allowed five firms — the three that have collapsed plus Goldman Sachs and Morgan Stanley — to more than double the leverage they were allowed to keep on their balance sheets and remove discounts that had been applied to the assets they

(visit the link for the full news article)


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Although the story itself may not seem 'alternative' in many ways, in light of the discussions here recently in regard to September 2008 being pre-ordained as a timeframe to bring down the markets, I feel it fits.

I am a bit perturbed that the decision was made by some Power that these firms should be allowed to leverage their assets so carelessly.

I know nothing about economics, but in my opinion it shows a lack of leadership in the SEC for causing this to happen. It also shows how large bureaucracies cannot police themselves in regard to their practices.

In Awe,
DocMoreau

www.nysun.com
(visit the link for the full news article)

Am I mistaken, or weren't they warned of this eventuality?

I seem to recall objections to the SEC regulatory change based upon this very scenario. Or am I misremembering history?

reply to post by Maxmars


I think they were warned. Maybe we were even warned. But it sure didn't do a thing.

After I posted this thread, I was watching CNBC, and I swear that one of the commentators compared the recent trading to 9-11 and around 9-11. He then said something about the recent short sales possibly being economic terrorism. He may have said the word hacker, but to be honest, it might have been the next guy talking about the McPalin email fiasco. I really wish I had a dvr, and all the techno-prowess that is bandied about these days. I think it was the bald guy who rolls up his sleeves and dings bells and yells alot, but not on his show. He was sitting at a desk, fairly passive for him.

I hope someone who caught it can post it.
DocMoreau

Wow... not the responses I expected...

Ironically, the source of this article has now gone under because of the economy.
DocMoreau