Changes

==Financial crisis and the bailout==

In 1975, the SEC’s trading and markets division ruled that investment banks must maintain a debt-to-net capital ratio of less than 12 to 1. In 2004, following extensive lobbying by the investment banks, the SEC under chairman Christopher Cox authorized five investment banks to develop their own net capital requirements. This enabled investment banks to push borrowing ratios to as high as 40 to 1.<ref>Stephen Labaton, [http://www.nytimes.com/2008/10/03/business/03sec.html Agency’s ’04 Rule Let Banks Pile Up New Debt], NY Times, October 8, 2008. Retrieved October 9, 2009</ref> These five investment banks were Goldman Sachs, [[Morgan Stanley]], [[Lehman Brothers]], [[Bear Stearns]], and [[Merrill Lynch]]. This very high debt-to-reserves helped lead to the financial crisis of 2008 by weakening the ability of these institutions to recover from losses incurred when the risky CDO and CDS bets failed.<ref>Julie Satow, [http://www.nysun.com/business/ex-sec-official-blames-agency-for-blow-up/86130/ Ex-SEC Official Blames Agency for Blow-Up of Broker-Dealers], NY Sun, September 18, 2008. Retrieved October 9, 2009</ref><ref>Ben Protess, [http://www.propublica.org/article/flawed-sec-program-failed-to-rein-in-investment-banks-101 ‘Flawed’ SEC Program Failed to Rein in Investment Banks], ProPublica, October 1, 2008. Retrieved October 9, 2009</ref>

Lee A. Pickard, who had been Director of the SEC’s Division of Market Regulation when the 1975 12-1 rule was ordered, said of the change, "The SEC modification in 2004 is the primary reason for all of the losses that have occurred."<ref>Julie Satow, [http://www.nysun.com/business/ex-sec-official-blames-agency-for-blow-up/86130/ Ex-SEC Official Blames Agency for Blow-Up of Broker-Dealers], NY Sun, September 18, 2008. Retrieved October 9, 2009</ref>

[[E. Stanley O'Neal]], then CEO of Merrill Lynch, was a [[Bush's Rangers|Bush Ranger]] having raised at least $200,000 for [[George Walker Bush|Bush]] in the [[U.S. presidential election, 2004|2004 presidential election]].

<ref>[http://www.tpj.org/docs/pioneers/pioneers_table.jsp Pioneers and Rangers], ''Texans for Public Justice'', accessed July 2007.</ref>

5. Mitt Romney (R) $172,025<br>

The company spent $3,952,760 for [[lobbying]] in 2006. $2,445,000 went to eight [[lobbying firms]] with the remainder being spent using in-house lobbyists.

<ref>[http://www.opensecrets.org/lobbyists/clientsum.asp?txtname=Merrill+Lynch&year=2006 Merrill Lynch lobbying expenses], ''Open Secrets''.</ref>