Capital Withdrawals From CSE Brokers and Leverage At CSE Holding Companies
While the CSE Brokers of Bear and Lehman may have remained solvent and liquid after the 2004 net capital rule change, it has been suggested the change had the effect of permitting a large expansion of the non-broker/dealer operations of Bear, Lehman, and the other CSE Holding Companies because they were able to extract excess net capital from their broker-dealers and use that capital to acquire dangerously large exposures to "risky assets."
Read more about this topic: Net Capital Rule
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