The Department of the Treasury Gets It

August 19, 2009 by · Leave a Comment
Filed under: General 

The Department of the Treasury released an 89-page “white paper” on June 30, which has since been updated on August 11. As we understand it, this is an administration paper. The section on regulatory reform is puzzling only because we are curious about who put it in there.

This section provides an exact and explicit distinction between single- and multiple-obligor securities. It tells credit ratings agencies to differentiate between single and multiple obligors, and fully disclose what the ratings mean/measure. It also instructs regulators to “reduce their use of credit ratings in regulations and supervisory practices” and to “recognize the potential differences in performance” between structured and unstructured products.

As you can imagine, we endorse the principles in this section.

Read Sections 4 and 5 here.

Speak Your Mind

Tell us what you're thinking...