In remarks to the American Institute of Certified Public Accountants, SEC Commissioner Kathleen Casey said corporate disclosure on mortgage and credit market conditions will be scrutinized in the course of normal SEC staff reviews of quarterly and annual corporate reports.

Securities and loans tied to riskier "subprime" borrowers, collateralized debt obligations, commercial paper exposure and market conditions will come under scrutiny, with particular attention paid to disclosure regarding off-balance sheet items and liquidity, said Casey. She gave the usual disclaimer that she was speaking for herself, not the SEC.

Mounting defaults on subprime loans also have led the SEC to look at how credit-rating agencies handled ratings of residential mortgage-backed securities, including the rating firms' procedures for managing potential conflicts of interest. Additionally, the SEC's enforcement division has formed a working group to examine subprime market issues and its market regulation division has stepped up its monitoring of the financial strength at some of Wall Street largest firms.

Frequent, sometimes daily checks of liquidity available to five firms - Bear Stearns Cos., Goldman Sachs Group Inc., Lehman Brothers Holding Inc., Merrill Lynch & Co., and Morgan Stanley - is one of the measures undertaken by U.S. regulators in response to the subprime loan weakness, Casey said.

Unlike other brokerage firms, those five firms are overseen by the SEC as consolidated entities, allowing regulators to look into their regulated and unregulated businesses and the holding company itself. As a rule of thumb, the SEC requires the holding companies of such entities to have enough liquidity on hand to meet expected cash outflows for at least 12 months.

Casey told the accounting group that she expects the SEC's "ongoing comprehensive review" of corporate disclosure and rating firm activity will help it assess what lessons may be learned from the subprime turmoil and whether any changes are needed to address concerns that might be identified in the process.