Consolidated Supervised Entities Program to End
 
October 6, 2008
 

On September 26, 2008, SEC Chairman Christopher Cox announced a decision by the Division of Trading and Markets to end the Consolidated Supervised Entities (CSE) program. The CSE, which was created in 2004, is a voluntary program designed to fill the regulatory void over investment banking conglomerates. At the time the CSE program was created, there was no statutory authority that required investment bank holding companies to report their capital, maintain liquidity, or submit to leverage requirements. While the CSE program provided oversight, because of the lack of specific legal authority for an agency to act as a regulator, the program’s effectiveness was diminished as the investment banks could opt in and out of supervision. This regulatory gap effectively ended when each of the major investment banks that had been a part of the CSE program were reconstituted within a bank holding company; they are now being supervised by the Federal Reserve.

Chairman Cox also announced the SEC’s plans to enhance oversight of the broker-dealer subsidiaries of bank holding companies regulated by the Federal Reserve. Lastly, Chairman Cox emphasized that a significant regulatory hole still exists as there is no government agency that currently regulates the approximately $60 trillion credit default swap market.

http://www.sec.gov/news/press/2008/2008-230.htm

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