Thursday, May 8, 2008
In recent speeches, SEC Chair Cox has emphasized the regulatory gap in the supervision of investment banks after Gramm-Leach-Bliley, where there is no mandatory consolidated supervision for four of the major linvestment banks -- Goldman Sachs, Lehman, Merrill Lynch and Morgan Stanley. To date the SEC has filled the gap with its voluntary Consolidated Supervisory Entity (CSE) program. Specifically, he has emphasized that the law does not require investment bank holding companies to compute capital and maintain liquidity on a consolidated or for a consolidated supervisor that is knowledgeable in the securities business. Cox also said that investment banks must disclose capital and liquidity positions in a way that investors can understand. Did the Chair's statements rattle the market yesterday? NYTimes, A Plunge Disrupts the Recent Calm; WSJ, SEC Ramps Up Street's Disclosure.