William H. Donaldson
Was SEC chair from 2003 - 2005.
From commentary and a story excerpt at The Big Picture
As we learn this morning via Julie Satow of the NY Sun, special exemptions from the SEC are in large part responsible for the huge build up in financial sector leverage over the past 4 years -- as well as the massive current unwind
Satow interviews [a] former SEC director, and he spits out the blunt truth: The current excess leverage now unwinding was the result of a purposeful SEC exemption given to five firms. ...
Who were the five that received this special exemption? You won't be surprised to learn that they were Goldman, Merrill, Lehman, Bear Stearns, and Morgan Stanley. ...
Here's an excerpt from The Sun:
"The Securities and Exchange Commission can blame itself for the current crisis. That is the allegation being made by a former SEC official, Lee Pickard, who says a rule change in 2004 led to the failure of Lehman Brothers, Bear Stearns, and Merrill Lynch.
The SEC allowed five firms — the three that have collapsed plus Goldman Sachs and Morgan Stanley — to more than double the leverage they were allowed to keep on their balance sheets and remove discounts that had been applied to the assets they had been required to keep to protect them from defaults.
Let's be careful here. The SEC did not act without approval by Cheney and Bush. This is like blaming the CIA for overthrowing the government in Iran in 1953. It was merely the agency executing the policy of the Eisenhower administration.
This SEC rule change was part of the conscious policy that Republicans have been following since the 1980s under Reagan, and after they achieved their dream of repealing laws regulating financial institutions under Clinton in 1999. A review of the vote on the Gramm-Leach bill in 1999 shows most Democrats, including Biden and even Lieberman, opposed, and most Republicans, including McCain, in support. This was a perfect example of Bill Clinton's "triangulation" strategy and the Bushies just upped the ante.
Again, let's not make it sound like this is an isolated agency run amok. That is precisely what McCain wants people to believe, and it is wrong. What went amok was a conscious policy McCain and the other Bushies believed with fervor.