WASHINGTON, May 13 (Reuters) – The U.S. Senate on Thursday took steps to overhaul the credit-rating agency business, widely maligned for its role in the 2007-2009 financial crisis, and opening it up to greater competition.
One amendment to a landmark Wall Street reform bill, from Democratic Senator Al Franken, would set up a government clearinghouse to assign debt rating duties to agencies. The other requires federal regulators to develop their own standards of credit-worthiness rather than rely solely on assessments from credit rating agencies, including the Big Three: Moody’s Corp (MCO.N), Standard & Poor’s (MHP.N) and Fitch Ratings (LBCP.PA).
The Franken amendment could ease pressures the agencies face to assign overly rosy ratings to debt instruments issued by firms that hire the agencies, its backers said.
"There is a staggering conflict of interest facing the credit rating industry," Franken said on the Senate floor.
To read the full article, click here…
