Congress Commissions Ratings Study

August 11, 2010 by · Leave a Comment
Filed under: The Ratings System 

As a compromise between the House wanting to abolish the mention of credit ratings in the Federal register, and the Senate, who tried to become MORE involved in the ratings process, Dodd-Frank (DONK) commissioned a study. The regulators have a year to study and report back to Congress about their use of NRSRO ratings.

We support Chairman Frank’s efforts to strike the reference and official use of ratings. Ratings can’t be corrupt and useless, AND be the source of regulatory measurement.

The study should model its answer on the NAIC solution to PMBS:

  1. Ignore the rating
  2. Find a reliable third party to price the assets
  3.  Publish the results.

The NAIC has already solved the rating problem, and it works. Let’s just copy that.

Agencies Issue Advance Notice of Proposed Rulemaking…Board of Governors of the Federal Reserve System, August 10, 2010

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