Not only did Europe lead the way, but this rule change was actually an attempt to increase regulation rather than to decrease it. Sound nuts? Well, let’s take a look [emphasis mine]:
But does the adoption of this relaxed net capital rule show that the SEC was “captured”? The problem with this simple hypothesis is that the SEC’s adoption of the CSE program in 2004 was not intended to be deregulatory. Rather, the program was intended to compensate for earlier deregulatory efforts by Congress that had left the SEC unable to monitor the overall financial position and risk management practices of the parent companies controlling these investment banks. Still, if the 2004 net capital rule changes were not intended to be deregulatory, they worked out that way in practice. The ironic bottom line is that the SEC unintentionally deregulated by introducing an alternative net capital rule that it could not effectively monitor.
So the new rule was an attempt to regulate more, not less
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