Rating Amendments Still Ongoing

If the SEC doesn’t like Moody’s methodology, why do we allow the ratings to dictate credit quality in investment policy, regulatory enforcement and public policy?

The ratings don’t measure credit quality, they measure “distance” to first dollar loss. The House bill tried to eliminate all reference to credit ratings from the federal register. The Senate version is not as comprehensive, but the amendment process is not over.

Moody’s Declines 8.1% After Disclosing ‘Wells Notice’ From SEC – Bloomberg, May 10, 2010