In a July 2009 report, the Government Accountability Office ("GAO") reported that SEC staff had stated to the GAO that (1) CSE Brokers did not take on larger proprietary positions after applying reduced haircuts to those positions under the 2004 rule change and (2) leverage at those CSE Brokers was driven by customer margin loans, repurchase agreements, and stock lending, which were marked daily and secured by collateral that exposed the CSE Brokers to little if any risk.The report also stated officials at a former CSE Holding Company told the GAO they did not join the CSE program to increase leverage.

The GAO confirmed that leverage at the CSE Holding Companies had been higher at the end of 1998 than at the end of 2006 just before the financial crisis began.

The GAO report includes a comment letter from the SEC that reaffirms points raised in the 2009 Sirri Speech and states that commentators have "mischaracterized" the 2004 rule change as having allowed CSE Brokers to increase their leverage or as having been a major contributor to the financial crisis.

The SEC has stated the net capital rule is intended to require "every broker-dealer to maintain at all times specified minimum levels of liquid assets, or net capital, sufficient to enable a firm that falls below its minimum requirement to liquidate in an orderly fashion." The Basic Method tries to reach this goal by measuring such "liquid assets" of the broker-dealer against most of its unsecured indebtedness.

The "liquid assets" serve as the "cushion" to cover full repayment of that unsecured debt.

Financial reports filed by those companies show an increase in their leverage ratios from 2004 through 2007 (and into 2008), but financial reports filed by the same companies before 2004 show higher reported leverage ratios for four of the five firms in years before 2004. The companies that received SEC approval to use its haircut computation method continue to use that method, subject to modifications that became effective January 1, 2010.

Beginning in 2008, many observers remarked that the 2004 change to the SEC's net capital rule permitted investment banks to increase their leverage and this played a central role in the financial crisis of 2007-2009.

She also stated the SEC was reviewing whether the "alternative net capital computation" system established by the 2004 rule change "should be substantially modified" and more generally whether minimum net capital requirements should be increased for all broker-dealers.

The SEC's "Uniform Net Capital Rule" (the "Basic Method") was adopted in 1975 following a financial market and broker record-keeping crisis during the period from 1967-1970.

The uniform net capital rule is a rule created by the U. Securities and Exchange Commission ("SEC") in 1975 to regulate directly the ability of broker-dealers to meet their financial obligations to customers and other creditors.

The haircut values of securities are used to compute the liquidation value of a broker-dealer's assets to determine whether the broker-dealer holds enough liquid assets to pay all its non-subordinated liabilities and to still retain a "cushion" of required liquid assets (i.e., the "net capital" requirement) to ensure payment of all obligations owed to customers if there is a delay in liquidating the assets.

The 1975 uniform net capital rule continued many features of the existing SEC net capital rule, but adopted other (more stringent) requirements of the NYSE net capital rule.