Taking the Road More Travelled

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

Shelby gives them a solution and they ignore it and report back in a year. So the Congressional solution to a regulatory failure is to let the same regulators study the problem and report back in a year if any changes need to be made.

Frank and Kanjorski had it right in the House version. De-recognize the NRSRO designation, strip the reference to ratings from the Federal Register, and let investors (and their advisors) bear the burden of due diligence.  If ratings are worthless without an NRSRO-mandated use, the ratings agencies will fold.

The capital markets are complicated and diverse. Millions of transactions a day defy static and specific rules. Let’s have less rules, more surveillance and prosecution. Enter the capital markets at your OWN RISK. If you expect the upside of an investment, you have to bear the downside. Ratings can’t be used as a substitute for personal due diligence.

House-Senate Talks Drop New Credit-Rating RulesThe New York Times, June 15, 2010

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