Franken Amendment Dropped

October 20, 2010 by · Leave a Comment
Filed under: The Rating Agencies, The Ratings System 

House and Senate negotiators voted to drop Senator Al Franken’s (D-MN) proposal to eliminate conflict of interest from the way credit rating agencies are engaged. Franken’s amendment was initially adopted by a vote of 64 to 35.

The reasons were not ideological so much as they concerned implementation issues. Some of the chief sponsors of the bill, including Financial Services Committee chairman Barney Frank (D-MA) and Banking Committee chairman Christopher Dodd (D-CT) came out against the provision, warning of practical difficulties in making random assignments of rating agencies.

“Wall Street’s broken credit rating system played an enormous part in our economic meltdown, and it’s our duty as lawmakers to make sure that never happens again,” said Franken. “We know that conflicts of interest rewarded cozy relationships instead of accuracy, and we know how to fix the problem. The language agreed on by the conference committee means more time and more study than I think is necessary, but it also means definite action will be taken.” This stupid idea died. Good riddance.

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