Much of the blame for Lehman Brothers' collapse has fallen on the Securities and Exchange Commission, but at least one former regulator thinks the New York Fed has just as much to answer for.

According to Anton Valukas, a partner at Jenner & Block LLP who was assigned by a bankruptcy court to examine the failure, the SEC failed in its role as a primary supervisor.

"The SEC told us they were constantly monitoring Lehman’s risk and liquidity," Valukas said in written testimony before a House Financial Services Committee hearing Tuesday on Lehman's collapse. "But there was little if any actual regulation; we observed no instance in which the SEC did anything, in Chairman Cox’s words, to 'act quickly in response to financial or operational weaknesses' at Lehman."

Howver, another panelist at the hearing, William K. Black, associate professor of economics and law at the University of Missouri – Kansas City, was equally critical of the New York Fed's role.

Black, a former official of the Federal Home Loan Bank Board and the Federal Savings and Loan Insurance Corp., disagreed with Valukas' conclusion that the SEC was Lehman's primary federal regulator; he said there was no way the SEC could have effectively regulated Lehman. 

"The SEC did not have the mindset, rules, or appropriate personnel" to make the consolidated supervised entity program, which gave it authority over Lehman, a success, he said in his prepared remarks. Moreover, the agency was "self-neutered by its leadership during the period Lehman was in crisis in 2001-2008."

Black said the SEC's only hope of effectively regulating Lehman was to partner with the Fed, which regulated mortgage lenders under the Home Ownership and Equity Protection Act and had "unprecedented practical leverage during the crisis because of its ability to lend and convert investment banks to commercial bank holding companies."  

This did not happen. "It was a painful, as a former regulator, to read the Valukas report’s discussion of the FRBNY staff’s open disdain for working cooperatively with the SEC to protect the public," Black said in his prepared remarks.

Republicans at the hearing seized on his remarks to argue against financial reform. They contended that regulators already had plenty of power that they failed to use in the lead-up to the investment bank's failure.

In an online poll this week, more than three-quarters of respondents, 78%, also said the reform bill would not have prevented Lehman's collapse had it been in effect in 2008 - not because regulators aren't using the tools they already have, but because the reform bill leaves the banking system dominated by a few large institutions overseen by multiple regulators. 

Just 12% of respondents said the bill would have prevented Lehman's collapse had it been in place at the time, since it would have curbed risky behavior that preceded it. Another 10% said the reform bill would have prevented Lehman's collapse because it would have given regulators the tools necessary to wind Lehman down without destabilizing financial markets.