US SEC ends programme to oversee investment banks
Sunday, 28 September 2008
WASHINGTON, Sept 27 (Reuters): The US Securities and Exchange Commission (SEC) is ending its programme to supervise large independent investment banks now that the five participants have collapsed or reorganised.
The announcement Friday coincided with criticism by the SEC's inspector general of the agency for failing to properly supervise broker dealer risk assessments in a program run by the Division of Trading and Markets.
"TM's (trading and markets) failure to carry out the purpose and goals of the Broker-Dealer Risk Assessment program hinders the Commission's ability to foresee or respond to weaknesses in the financial markets," said the inspector general's report.
Under the investment bank program, Merrill Lynch & Company, Lehman Brothers Holding Inc, Bear Stearns, Goldman Sachs Group Inc and Morgan Stanley -- volunteered to be monitored for capital and liquidity levels.
Bear Stearns was taken over by JPMorgan Chase & Company in an emergency sale engineered by US officials, Lehman has filed for bankruptcy protection, Merrill is being taken over by Bank of America Corporation, and Goldman and Morgan Stanley have converted themselves into bank holding companies regulated by the Federal Reserve.
In July, the SEC and the Federal Reserve formalised a deal to share information about banks, in a move expected to strengthen oversight of the financial markets that were still reeling from the demise of Bear Stearns.
The announcement Friday coincided with criticism by the SEC's inspector general of the agency for failing to properly supervise broker dealer risk assessments in a program run by the Division of Trading and Markets.
"TM's (trading and markets) failure to carry out the purpose and goals of the Broker-Dealer Risk Assessment program hinders the Commission's ability to foresee or respond to weaknesses in the financial markets," said the inspector general's report.
Under the investment bank program, Merrill Lynch & Company, Lehman Brothers Holding Inc, Bear Stearns, Goldman Sachs Group Inc and Morgan Stanley -- volunteered to be monitored for capital and liquidity levels.
Bear Stearns was taken over by JPMorgan Chase & Company in an emergency sale engineered by US officials, Lehman has filed for bankruptcy protection, Merrill is being taken over by Bank of America Corporation, and Goldman and Morgan Stanley have converted themselves into bank holding companies regulated by the Federal Reserve.
In July, the SEC and the Federal Reserve formalised a deal to share information about banks, in a move expected to strengthen oversight of the financial markets that were still reeling from the demise of Bear Stearns.