Well, this is seriously X-rated...!!!

SEC should clear its own fault lines before blaming rating agencies

It seems as if the bosses at US Securities and Exchange Commission (SEC) have never heard the famous comment from British writer Douglas Noël Adams (of ‘Hitchhiker’s Guide to the Galaxy’ fame), which goes like this, “It is a mistake to think you can solve any major problem just with potatoes.” SEC is all set to bring in the ‘Credit Rating Agency Duopoly Relief Act’ (this was cleared by the US House of Representatives on July 12, 2006), to enhance credit rating quality by allowing competition and by curtailing the duopoly of Moody’s and Standard & Poor’s (S&P).

At present, out of the five Nationally Recognised Statistical Rating Organisations (NRSROs), Moody’s Investors Service and S&P control over 80% of the market share. And SEC wants to reduce the same by dismantling NRSROs to allow rating agencies with even three years of experience to register with SEC as ‘statistical ratings organisations’ (SROs).

For complete IIPM article click here

Source:- IIPM Editorial, 2006

Editor:- Prof. Arindam Chaudhuri

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