Was that Horse, Barndoor?

On the 26th, the SEC announced that it was terminating the Consolidated Supervised Entity (CSE) program of 2004. All the former CSEs are either defunct or have become banks regulated by the Fed.

Cox lays blame for the failure of CSE at the door of Congress. He says Gramm-Leach-Bliley should have given his agency the power to regulate companies that own investment banks more, though the SEC appears to have chosen to regulate them less.

CSE let highly capitalized broker-dealers use mathematical models, like Value-at-Risk, to value swaps and derivatives for purposes of the Net Capital Rule (15c3-1). The Net Capital Rule ensures that if a broker dealer goes under it will be able to pay its debts.

The CSEs were:

Bear Stearns
Goldman Sachs
Lehman Brothers
Merrill Lynch
Morgan Stanley