‘Flawed’ SEC Program Failed to Rein in Investment Banks

by Ben Protess , ProPublica - October 1, 2008 6:01 pm EDT

The Securities and Exchange Commission last week abolished the special regulatory program that it applied to Wall Street's largest investment banks. Known as the "consolidated supervised entities" program, it relaxed the minimum capital requirements for firms that submitted to the commission's oversight, and thus, in the view of some experts, helped create the current global financial crisis.

But the SEC's decision to ax the program currently affects no one, since three of the five firms that voluntarily joined the program previously collapsed and the other two reorganized.