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Press Releases - **Legislative Alert**

Date: Sept. 22, 2006
Location: Washington, DC
Issues: Finance and Banking


**Legislative Alert**
Senate Approves Fitzpatrick's Credit Ratings Bill

Washington, Sep 22 -

This morning, the Senate passed sweeping legislation largely based off Congressman Michael G. Fitzpatrick's bill to protect investors by reforming the credit ratings industry. The Senate passed their version of Fitzpatrick's legislation, S. 3850, by unanimous consent.

"I thank Senator Shelby and Senator Sarbanes for their leadership in seeing that this important investor protection legislation pass the Senate," Fitzpatrick said. "In light of the mistakes S&P and Moody's made by telling investors that Enron and WorldCom were safe investments just days before they filed for bankruptcy, the current state of regulation in the credit ratings industry cannot stand. Our financial markets demand transparency, accountability and competition."

S&P and Moody's rate more than 99 percent of the debt and preferred stock issues in the U.S and account for about 80 percent of the rating industry revenues due to the Securities and Exchange Commission's (SEC) arcane and artificial barrier to entry. While over 130 credit rating agencies exist, today only five Credit Rating Agencies have been approved - nationally recognized - by the SEC to participate in the marketplace besides S& P and Moody's. As a result, S&P and Moody's are raking in record fees.

"The duopoly that exists between Moody's and S&P must be broken and this legislation would do just that," Fitzpatrick stated. "Creating a clear, defined and accountable registration process for credit ratings firms which will create competition, increase the quality of ratings and providing better information for investors." Fitzpatrick added.

On June 20, 2005, Fitzpatrick introduced the Credit Rating Agency Duopoly Relief Act, H.R. 2990, to create more accountability, transparency and competition into the credit ratings industry. On July 12th the House passed Fitzpatrick's legislation by a vote of 255 to 166 (Roll Call: 368). "I am very hopeful that we can find a way to

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http://fitzpatrick.house.gov/News/DocumentSingle.aspx?DocumentID=50619

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