Lawmakers Seek Tighter Oversight Of Credit Rating Agencies

By: Associated Press Email
By: Associated Press Email

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Wednesday, May 20, 2009

Tightening oversight of Wall Street's credit rating agencies is on the minds of lawmakers who want to protect investors.

At issue is government oversight of the $5 billion-a-year industry dominated by Standard & Poor's, Moody's Investors Service and Fitch Ratings. The firms have been widely criticized for failing to give investors adequate warning of the risks in subprime mortgage securities, whose collapse helped set off the global financial crisis.

Rhode Island Sen. Jack Reed has introduced legislation that would give the Securities and Exchange Commission greater authority to oversee credit ratings agencies.

The bill also would allow investors to take legal action against rating firms that "knowingly or recklessly" fail to review significant information in developing ratings.

In the House, a measure would direct the SEC to write specific rules for ratings of complex securities.

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