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Financial crisis of 2007–2008

US Securities and Exchange Commission relaxed the net capital rule

2004
U.S.

In 2004, the US Securities and Exchange Commission relaxed the net capital rule, which enabled investment banks to substantially increase the level of debt they were taking on, fueling the growth in mortgage-backed securities supporting subprime mortgages. The SEC has conceded that self-regulation of investment banks contributed to the crisis.


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