LeMieux Responds to Franken

May 17, 2010 by · Leave a Comment
Filed under: The Ratings System 

The Al Franken amendment added more government involvement in the NRSRO space, and added a layer to getting a rating on a securitized asset. This will make credit more expensive and less available.

Thankfully there is  SA 3774, the LeMieux amendment that passed in the Senate,  which strips the references of ratings from the federal register. This mirrors the language in the House/Barney Frank Financial Reg. Reform bill, but should become effective now.

Completely removing reference like the House version helps, but then regulators shouldn’t hold financial institutions hostage to a discredited rating.

It is logically inconsistent for the ratings to be useless and the foundation of regulatory credit analysis.

[$$] The Credit Raters BrawlWSJ.com, May 14, 2010

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