Search Form
First, enter a politician or zip code
Now, choose a category

Public Statements

Sen. Franken to SEC on Credit Rating Industry: "There Must Be Reform'

Press Release

By:
Date:
Location: Unknown

Today, during a special roundtable discussion held by the Securities and Exchange Commission (SEC) on the credit rating industry, U.S. Sen. Al Franken (D-Minn.) made the case that the industry needs to be cleaned up in order to protect Minnesotans against the effects of future financial meltdowns, like the 2008 collapse.

Sen. Franken also called on SEC Chair Mary Jo White and several other commissioners in attendance to take swift action and implement rules to limit the conflict of interest in the rating industry.

"One thing is clear: there must be reform," said Sen. Franken in his remarks to members of the SEC at today's roundtable. "You have the opportunity and the responsibility to take action in the public interest. We cannot leave ourselves unnecessarily exposed to yet another financial collapse, and that's what we will be doing if we don't reform the credit rating industry. And that means acting - and acting swiftly - to propose rules to limit conflicts of interest in the credit rating industry."

Today's roundtable included public and private financial experts and regulators as well as representatives from the credit rating agencies and was held to examine a report the SEC recently did that explored possible options for reform, including Sen. Franken's.

The report was mandated by a provision authored by Sens. Franken and Roger Wicker (R-Miss.) in the 2010 Wall Street reform law. Also included in the Franken-Wicker amendment was a proposal to root out the inherent conflict of interest in the current "pay-to-play" model used in the industry-banks pay the credit rating agencies, most notably S&P, Fitch, and Moody's, to rate their financial products-by replacing it with a "pay-for-performance" model.

If fully implemented, as the senators are pushing for, their amendment would create an independent, self-regulated board comprised of investors, representatives from the credit rating and banking industries, and academics which would assign the banks' financial products to different rating agencies based on the agencies expertise, resources, and track record.


Source:
Skip to top
Back to top