[W]e and other global firms have, for many years, urged the SEC to reform its net capital rule to allow for more efficient use of capital. This is the single most important factor in driving significant parts of our business offshore, so that our firms can remain competitive with our foreign competitors risk-based capital standards must become the norm. —2000 Testimony by which Paulson asks for the net capital rule exemption and voluntary self-supervision.
The $1.5 trillion in the hugely popular 401(k) accounts “is real money for real workers, and we must do all we can to help make sure it’s there for them when they retire.”–Bush works to protect 401(k) plans, October 2002
The SEC and its leaders must be removed and the benefit for 5, “Cash for Trash“, must be rescinded.
In 2004 the $5 billion plus club (Goldman Sachs, Morgan Stanley, Merrill Lynch, Bear Stearns and Lehman Brothers) were given special market advantage of net exemption rule without risk management.
Even in poker you have to have some chips. In this game, where the SEC rule 15c3-1 is exempt, the requirement is $5 billion plus. The players did not have the $5 billion.
On September 22, 2008 Barclay’s Capital was given temporary conditional relief from the net exemption rule. SEC order.
There continues to be a conscious effort on both SEC and “the chosen” to mislead the public. Its not a big mistake, it is a crime, they are crooks and the carnage continues. They cannot be allowed handicaps and to continue cooking their books with discount removal and other perceived as too common risk nuisances. They must play the game like the rest of the market.
“In 1891, a con artist named Charles Wells arrived in Monte Carlo with money freshly conned from investors and hit the roulette wheel. Using the risky and debunked Martingale System where you double your bet every time you lose to eliminate losses, Wells went on a lucky streak and won a million Francs, making him the second to earn the title of Man Who Broke the Bank at Monte Carlo.”–The Man Who Broke the Bank at Monte Carlo
“The so-called net capital rule was created in 1975 to allow the SEC to oversee broker-dealers, or companies that trade securities for customers as well as their own accounts. It requires that firms value all of their tradable assets at market prices, and then it applies a haircut, or a discount, to account for the assets’ market risk. So equities, for example, have a haircut of 15%, while a 30-year Treasury bill, because it is less risky, has a 6% haircut.
The net capital rule also requires that broker dealers limit their debt-to-net capital ratio to 12-to-1, although they must issue an early warning if they begin approaching this limit, and are forced to stop trading if they exceed it, so broker dealers often keep their debt-to-net capital ratios much lower.”–NY Sun
“The 2004 decision was aimed at easing regulatory burdens that the European Union was about to impose on the foreign operations of United States investment banks.
The Europeans said they would agree not to regulate the foreign subsidiaries of the investment banks on one condition — that the commission regulate the parent companies, along with the brokerage units that the S.E.C. already oversaw.
A 1999 law, however, had left a gap that did not give the commission explicit oversight of the parent companies. To get around that problem, and in exchange for the relaxed capital rules, the banks volunteered to let the commission examine the books of their parent companies and subsidiaries.”–“The Reckoning,” NYTimes
The Commission did not bother to examine the books of these companies and their subsidiaries. Under the management of Mr. Cox, securities laws were rewritten to make investor lawsuits harder to file; accounting rules favored executive stock options; and enforcement staff investigations and prosecutions were all but impossible. He repeatedly reversed or reduced proposed settlements that companies had tentatively agreed upon.
401K plans are not insured by the federal government, and their investments, whatever they might be, carry different degrees of uncertainty.–standard fine print disclaimer